Rate Buydown or Price Reduction: Which Gets Your Columbus Home Sold?
Recently, a buyer made an offer on one of my listings priced just under $600,000. They offered $580,000, asked my sellers to pay $15,000 toward their closing and loan costs, and made the whole offer contingent on selling their own home first. My sellers said no, and a better offer came along. It's the only request like that I've seen so far, but the market has shifted, and I expect we'll see more of them.
Here's the short version. When a buyer's monthly payment is what's standing in the way, the same dollars usually do more as a rate buydown than as a price cut. When the price itself is the problem, a buydown won't fix it.
I can run both options on your home's numbers, so you can see what each one does for buyers and what it does to your net.
For most Columbus sellers, money put toward a buyer's rate buydown lowers their monthly payment far more than a price cut of the same size. With the average 30-year rate at 7.32% in late October 2026, $15,000 off a $600,000 price saves a buyer with 20% down about $82 a month, while about $11,350 toward a 2-1 buydown saves them about $626 a month the first year and $320 the second. That only helps when the payment is the obstacle. If the home is priced above what comparable homes support, the price is what has to change.
The math works the same way whether you're selling in Powell, Dublin, Westerville, Lewis Center, Worthington, Delaware or Galena.
- What's the difference between a rate buydown and a price reduction?
- How does a seller-paid 2-1 buydown work?
- Which saves a Columbus buyer more each month?
- How much can sellers pay in concessions?
- When does a price reduction still make more sense?
- How should Columbus sellers weigh an offer that asks for concessions?
What's the difference between a rate buydown and a price reduction?
A price reduction lowers what the buyer pays for the house. Their loan gets a little smaller, their down payment shrinks a little, and the savings are spread over the life of the loan.
A rate buydown leaves the price alone. Instead, you agree to pay part of the buyer's financing cost at closing, which lowers their interest rate. A permanent buydown uses discount points to lower the rate for the life of the loan. Each point costs 1% of the loan amount, and how much it lowers the rate depends on the lender. A temporary buydown lowers the rate for the first year or two, then it goes back to the full rate.
Either way, the money comes out of your proceeds. A $15,000 price cut and a $15,000 credit leave your net in roughly the same place. The difference is what that money does for the buyer.
How does a seller-paid 2-1 buydown work?
A 2-1 buydown is the most familiar temporary version. The buyer's rate is 2 percentage points lower in year one, 1 point lower in year two, and back to the full rate from year three on.
The cost is the payment difference for those two years, added up. The buyer's lender calculates the exact amount, it's paid from your proceeds at closing, and it sits in a separate account that covers part of each payment until it runs out.
Two details matter. The buyer still has to qualify at the full rate, so a temporary buydown helps with the payment, not with getting approved. And if rates fall and the buyer refinances early, Fannie Mae's rules send any unused money toward the payoff or back to the buyer, depending on the buydown agreement. It doesn't come back to you, but it isn't wasted either.
Which saves a Columbus buyer more each month?
Here's what the numbers look like on a $600,000 home with 20% down, a $480,000 loan, at the 7.32% average 30-year rate Freddie Mac reported for the week of October 22, 2026.
| Option | Payment, year 1 | Year 2 | Year 3 on | Cost to you |
|---|---|---|---|---|
| No price change or buydown | $3,297 | $3,297 | $3,297 | $0 |
| $15,000 price reduction | $3,215 | $3,215 | $3,215 | $15,000 |
| 2-1 buydown | $2,671 | $2,977 | $3,297 | About $11,350 |
Monthly principal and interest only. Taxes, insurance and any mortgage insurance are extra, and actual rates vary by buyer and lender.
The price cut saves the buyer about $82 a month and $3,000 on their down payment. The buydown costs you less and saves them about $626 a month in year one and $320 in year two. The roughly $3,650 left over from a $15,000 budget could go toward their closing costs.
Over the first two years, the buyer saves about $11,350 in payments with the buydown and about $2,000 with the price cut. The price cut keeps saving a small amount every month for as long as they keep the loan, and that's the honest case for it.
A year ago, that same average rate was 6.19%. The market has changed quickly, and I think some agents are already presenting buydowns to their buyers.
A price cut gives the buyer a small discount every month for the life of the loan. A buydown gives them a much bigger break in the first year or two. Your net is about the same either way. The real question is which one the buyer you need is missing.
How much can sellers pay in concessions?
A seller-paid buydown counts as a seller concession, and every loan program caps how much a seller can contribute. On a conventional loan for a home the buyer will live in, Fannie Mae's limit depends on the buyer's down payment:
- Less than 10% down: up to 3% of the price
- At least 10% but less than 25% down: up to 6%
- 25% or more down: up to 9%
FHA loans allow up to 6% of the sales price in interested party contributions, and a seller-paid buydown counts toward it. On VA loans, a seller-funded temporary buydown counts as a concession, capped at 4% of the home's reasonable value.
Those limits cover closing costs and buydown money together. With less than 10% down on a $600,000 home, a buyer has $18,000 of room for everything, and that can go fast.
In Ohio, the amount goes into the purchase contract, and a buydown request doesn't always say "buydown." In the offer I mentioned, it was one line in the additional terms: the seller would pay up to $15,000 of the buyer's closing costs and prepaids, with the loan discount fee on the list. Discount points are how a permanent buydown gets paid for, so that line gave the buyer room to buy down their rate.
One more thing: the appraiser sees the concession too. Lenders have to disclose it, so a credit isn't a way to make a sale price look higher than the home is worth.
When does a price reduction still make more sense?
The honest answer is that a buydown is a payment tool, not a pricing tool. If your home is priced above what the comparable homes support, buyers aren't stuck on the payment. They're stuck on the price, and they'll see it the moment they compare. That's what I covered in what overpricing actually costs.
A price reduction also does a few things a buydown can't:
- It changes what buyers see. A new price shows up in portal searches and price-drop alerts, and it can move your home into a search range it wasn't reaching. A buydown stays invisible until someone reads the details or asks.
- It lowers the number the appraisal has to support. With a buydown, the full price still has to appraise, so the credit doesn't help if the value isn't there.
- It works for every buyer, including cash buyers and buyers who'd rather borrow less than lower their rate.
If you've had showings and no offers, start with what to do when your home isn't selling before reaching for a buydown.
How should Columbus sellers weigh an offer that asks for concessions?
Look at the net, not the headline price. That $580,000 offer with $15,000 in concessions was really a $565,000 offer, about $35,000 under list, before any other selling costs. Add a contingency on the buyer's own sale, and the offer was asking my sellers to give up price, cash and certainty all at once.
That doesn't mean every concession request is a bad sign. Here's how I'd look at one:
- Subtract the concession from the price to see what the offer is really worth to you.
- Compare that number with the other interest in your home and with what a price reduction of the same size would have done.
- Ask what the money is for. A buyer who wants help with the rate is solving a payment problem. A buyer who wants a lower price and a credit is negotiating on both.
- Read the rest of the terms. Contingencies, timing and financing can matter as much as the number.
If you're moving up, you may end up on the other side of this conversation, asking a seller to help with your rate on the next home. That's worth thinking through alongside whether to sell with a 3% mortgage.
Buydowns haven't come up for most of my sellers yet. The market changed recently, and I think we'll see more of them. If a buyer asks, you'll want to know what the request is worth before you answer.
Related Reading
- How Much Will I Net From Selling My Home?
- Should You Always Accept the Highest Offer on Your Home?
- How to Price Your Home Right in Central Ohio
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If you're weighing a buydown, a price change or neither, I'm happy to help you think it through. I'll run both on your home's numbers so you can see what each one does for buyers and for your net, before an offer forces the decision.
Frequently Asked Questions About Rate Buydowns and Price Reductions
Is it better for a seller to offer a rate buydown or lower the asking price?
If the buyer's monthly payment is the obstacle, a seller-paid rate buydown usually does more than a price cut of the same size. At a 7.32% rate on a $480,000 loan, $15,000 off the price lowers the payment about $82 a month, while about $11,350 toward a 2-1 buydown lowers it about $626 a month in year one. If the home is priced above what comparable homes support, a buydown won't fix that, and the price is what needs to change.
How much does a 2-1 buydown cost a seller?
The cost is the total payment difference for the two buydown years, so it depends on the loan amount and the rate. On a $480,000 loan at 7.32%, a 2-1 buydown costs about $11,350. The buyer's lender calculates the exact amount, and it's paid from the seller's proceeds at closing.
Does a seller-paid buydown count as a seller concession?
Yes. Seller money for a buydown counts toward the loan program's limit on seller contributions. Fannie Mae allows 3% to 9% of the price depending on the buyer's down payment, FHA allows 6%, and VA caps concessions, including a seller-funded temporary buydown, at 4% of the home's reasonable value.
Does a buyer still have to qualify at the full interest rate with a buydown?
With a temporary buydown, yes. Fannie Mae requires lenders to qualify the buyer at the full note rate, not the lower starting rate. The buydown lowers the payment for a year or two, but it doesn't help a buyer get approved for a bigger loan.
What happens to buydown money if the buyer refinances?
Under Fannie Mae's rules, if the loan is paid off before the buydown money is used up, the remaining funds go toward the payoff or back to the buyer, depending on the buydown agreement. The money doesn't return to the seller. Either way, the seller's cost is set at closing.
How can sellers attract buyers when mortgage rates are high?
Start with a price that matches the comparable homes, because no incentive fixes an overpriced listing. From there, a seller-paid buydown or a credit toward closing costs can lower what buyers need each month or at closing. The right choice depends on your home, your likely buyers and your net, so it's worth running the numbers both ways before you decide.
This article is general information, not legal or lending advice. The signed purchase contract controls what the seller pays at closing, and the buyer's lender decides how a buydown is structured and whether it fits their loan program. For a specific legal question, talk with an Ohio real estate attorney. Payment figures are principal and interest only, calculated from the Freddie Mac average rate. Source: Freddie Mac Primary Mortgage Market Survey, October 22, 2026; Fannie Mae Selling Guide B2-1.4-04 and B3-4.1-02; HUD Handbook 4000.1; U.S. Department of Veterans Affairs, Temporary Buydowns.
Rita Boswell is a Dublin-based Realtor with Real of Ohio who helps move-up and downsizing homeowners sell in Powell, Dublin, Westerville, Lewis Center, Worthington, Delaware and Galena.
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