In the evolving 2025 housing market, where interest rate fluctuations remain a key concern, mortgage rate buydowns offer crucial flexibility. You're not alone if you've heard the term but aren't sure how it works. This guide will demystify mortgage rate buydowns, revealing how they can significantly lower your monthly payments and make homeownership a reality in today's challenging market.

What is a Mortgage Rate Buydown, and How Can It Help?

This tool allows you to pre-pay interest through upfront fees, commonly known as mortgage points, effectively lowering your monthly mortgage payment. Mortgage points typically cost one percent of your loan amount per point. For instance, on a $500,000 loan, a point would cost $5,000, potentially reducing your interest rate by around 0.25%.

Recognizing the importance of affordability, WPG, in collaboration with our preferred lender, US Bank, may offer to cover these buydown fees at select neighborhoods, providing buyers with a significant financial advantage and a more manageable path to homeownership.

Types of Mortgage Rate Buydowns

There are two types of mortgage rate buydowns: temporary and permanent. When you purchase mortgage points, you can enjoy the new, lower rate for the first few years or the entire life of the loan.

Permanent Buydown Scenario: 30-Year Fixed

A permanent rate buydown on a 30-year fixed loan gives homebuyers added buying power by lowering the interest rate over the entire length of the loan. Here is an example of a buyer looking to purchase homesite 127 at Nova at University Park, which is priced at $796,462, with a 30-year fixed loan:

With 10% down, the loan amount is $716,816

Monthly mortgage payment with a 30-year fixed 6.625% loan is $6,082**

Monthly mortgage payment with a 30-year fixed 4.99% loan is $5,345*

With the lower rate, that’s a monthly savings of $736 per month, a savings of $265,291 over the life of the loan

In this scenario, the reduced mortgage rate would result in immediate, drastic savings for the buyer. Even better: with new home incentives available at select neighborhoods, WPG could pay for the cost to reduce the rate on the buyer’s behalf.

Temporary Buydown Scenario: 7-1 ARM

A 7-1 adjustable-rate mortgage (ARM) remains a favored temporary buydown option with buyers who may sell their home before the 30-year term is up. This provides homeowners with a fixed interest rate for the initial seven years, offering a period of predictable monthly payments before the first rate adjustment. On a standard 30-year loan, the interest rate will adjust annually for the remaining 23 years. With this option, if the homeowner decides to sell or refinance before that time, they may not see an adjustment and continue to enjoy a lower rate.

It is important to consult with our preferred lender, US Bank, before deciding which rate buydown could work best for you, your financial situation, and your long-term home goals.

Buying Down Your Rate on a WPG Home

WPG offers homebuyers an interest rate reduction at several of our neighborhoods, including University Park, Bald Eagle Point, and Mahogany at Belcourt Seven Oaks.

With a clearer understanding of mortgage rate buydowns, you're better equipped to navigate the 2025 housing market. If you are ready to learn more, consider exploring our available California and Idaho communities and contact our New Home Specialist to take the next steps toward your dream home.

*Nova Homesite 127 Purchase Price of $796,462.00; 10% Down Payment $79,646; $716,816 loan amount; 30 Year Fixed Conforming Rate of 4.99% (APR 5.61%); and $3,828 monthly mortgage payment, with PITI & HOA $5,345. Rates subject to change without notice. Offer only available through US Bank to approved borrowers. All buyers must be pre-qualified by Jeff Wiersma at US Bank. ADU income for qualification is subject to approval and market conditions. Interest rate offer is only applicable for a new contract written for new homesites, may not replace any prior agreement currently in escrow, and is non-transferable.



**Nova Homesite 127 Purchase Price of $796,462.00; 10% Down Payment $79,646; $716,816 loan amount; 30 Year Fixed Conforming Rate of 6.625% (APR 6.699%); and $4,565 monthly mortgage payment, with PITI & HOA $6,082. Rates subject to change without notice. Offer only available through US Bank to approved borrowers. All buyers must be pre-qualified by Jeff Wiersma at US Bank. ADU income for qualification is subject to approval and market conditions. Interest rate offer is only applicable for a new contract written for new homesites, may not replace any prior agreement currently in escrow, and is non-transferable.