If you are shopping new construction in Georgia this fall, you will probably face a version of the same choice: take the builder's advertised rate near 4%, or ask for a lower price instead. Deciding between a builder rate buydown vs price reduction is not a matter of which headline number looks better. It depends on how long you will keep the loan, whether you can qualify, and how Georgia's closing taxes and property tax rules treat each option.
The backdrop: Freddie Mac put the average 30-year fixed rate at 6.95% on Sept. 17, 2026, up from 6.76% the week before and 6.26% a year earlier. The 15-year averaged 6.26%. Builders are responding. The NAHB/Wells Fargo Housing Market Index for September found 66% of builders using incentives, up from 63% in August and the highest share since December. It also found 38% cutting prices, with an average cut of 6%. "Buyer traffic has weakened across much of the country, largely because of rising mortgage rates," NAHB Chairman Bill Owens said. The index for the South region was 31.
That means you may have some leverage. What follows explains how to use it.
What does a builder's 3.92% rate really mean?
It is an average advertised rate across listings, not a 30-year fixed quote you can lock. A Realtor.com analysis of August 2026 new-construction listings, released Sept. 15, found reduced rates on 13.8% of listings, the most common incentive, with an average advertised rate of 3.92%. We could not reach Realtor.com's page directly; the figures are as reported by The Close and Norada. That same analysis found 18.8% of listings advertising at least one incentive of any kind.
The important detail: that average includes temporary buydowns and adjustable-rate mortgages. A "3.9%" sign may describe the first year of a loan that steps up to a rate near today's market, or an ARM that can reset. Before comparing anything, ask the builder three questions:
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How long does the rate last? One year, two years, three years, or the life of the loan?
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What is the note rate? That is the rate written on your mortgage and the one you pay once any temporary subsidy runs out.
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Do I have to use the builder's lender? Many offers only apply with an affiliated lender, which limits your ability to shop.
What is the difference between a rate buydown and a price cut?
A price cut lowers what you pay for the house, and so it lowers your loan, your down payment and possibly your tax basis. A buydown leaves the price alone and uses the builder's money to lower your interest rate, either for a few years or for the life of the loan.
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Permanent buydown (discount points). The builder pays points upfront to lower your note rate for the full term. The savings last only as long as you keep that loan.
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Temporary buydown (for example, a 2-1). The builder deposits money into a custodial account that subsidizes your payment. Under a 2-1, the rate is 2 points below the note rate in year one, 1 point below in year two, and the full note rate from year three on. Under Fannie Mae rules, a temporary buydown can last no more than three years, cut the rate by no more than 3 percentage points, and step up by no more than 1 point a year.
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Price reduction. The contract price drops. Everything tied to price or loan amount shrinks with it.
A worked Georgia example: $400,000 new build, $20,000 from the builder
The numbers below are illustrative. The researcher calculated them using standard amortization. Buydown pricing varies by lender and by day, so treat the permanent buydown figures as an assumption and get an actual quote.
Setup: a $400,000 new build, 10% down, a $360,000 loan at 6.95%. Principal and interest is about $2,383 a month. The builder is offering about $20,000 in concessions, which fits within Fannie Mae's 6% cap at 90% loan-to-value ($24,000).
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Option A, $20,000 price cut: price $380,000, loan $342,000, principal and interest about $2,264 a month. That is about $119 a month less for the life of the loan. Your down payment falls by $2,000.
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Option B, 2-1 temporary buydown on $360,000: year one at 4.95% (about $1,922 a month), year two at 5.95% (about $2,147), year three onward at 6.95% ($2,383). The subsidy costs the builder about $8,400, leaving about $11,600 that could go toward closing costs.
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Option C, permanent buydown: using a rough rule of 1 point per 0.25% of rate, $20,000 is about 5.6 points on $360,000. That could buy roughly 1.25 to 1.4 percentage points, to about 5.70%. Principal and interest would be about $2,089, about $294 a month below the no-concession payment and about $175 below the price cut.
| Option | Loan | Year 1 P and I | Year 2 P and I | Year 3+ P and I | Down payment | Builder money left for closing | 5-year P and I total | | --- | --- | --- | --- | --- | --- | --- | --- | | No concession | $360,000 | $2,383 | $2,383 | $2,383 | $40,000 | $0 | about $142,980 | | A: $20,000 price cut | $342,000 | $2,264 | $2,264 | $2,264 | $38,000 | $0 | about $135,840 | | B: 2-1 temporary buydown | $360,000 | $1,922 | $2,147 | $2,383 | $40,000 | about $11,600 | about $134,616 | | C: permanent buydown (assumed pricing) | $360,000 | $2,089 | $2,089 | $2,089 | $40,000 | $0 | about $125,340 |
Two cautions about that table. First, the five-year totals are payments only. They do not count equity: with Option A you owe $18,000 less from day one, and that gap persists. Second, Option B's five-year total looks competitive only because of the $11,600 closing credit it also frees up. Without that credit, most of its advantage is concentrated in the first two years.
Is a permanent buydown better than a price reduction?
Only if you keep the loan long enough. In this example the permanent buydown beats the price cut by about $175 a month, but that advantage lasts only while this specific loan stays in place. If you refinance or sell, the prepaid interest is gone. The price cut's benefits (a smaller loan, more equity, a lower loan-to-value and possibly a lower tax basis) stay with you.
Does a temporary buydown help you qualify for a mortgage?
No. Under Fannie Mae's temporary buydown rules, the lender qualifies you at the note rate, not the bought-down rate. In the example, your debt-to-income ratio is calculated on the $2,383 payment, not the $1,922 year-one payment. The buydown funds also sit in a custodial account and cannot be used to reduce your loan-to-value.
For a first-time buyer whose DTI is already tight, that matters. A price cut lowers the payment the lender actually counts. A 2-1 buydown does not.
How much can a builder contribute toward a buydown?
Lenders cap what a builder or seller (an "interested party") can put in, and buydown money counts toward that cap.
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Conventional loans (Fannie Mae): for a primary residence, the interested-party contribution limit is 3% when LTV is above 90%, 6% at 75.01% to 90% LTV, and 9% at 75% LTV or below. The percentage is applied to the lower of the sales price or the appraised value. Concessions above the cap are deducted from the sales price and the LTV is recalculated.
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FHA loans: interested parties may contribute up to 6% of the sales price, including permanent and temporary buydowns, according to HUD. Anything above 6% is treated as an inducement to purchase.
If you are putting less than 10% down on a conventional loan, the 3% cap can squeeze a large builder package. A price cut does not count against these limits in the same way, because it simply lowers the price.
Watch the appraisal and the base price
Because conventional caps use the lower of price or appraised value, and concessions are reported to the lender, the appraisal matters. The risk to watch for is a base price that was raised to fund the buydown. If the home appraises below contract, you may face an appraisal gap, and you start with less real equity than the price suggests. Trade reporting from HousingWire notes that incentives at the largest builders are substantial; Lennar's averaged 13.3% of the sales price in one recent quarter. Ask directly whether the price with the incentive differs from the price without it.
Georgia closing math: transfer tax and intangible recording tax
Two Georgia taxes move with a price cut and do not move with a buydown.
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Transfer tax. Georgia's real estate transfer tax is $1 for the first $1,000 of sale price and $0.10 per $100 after that, based on the price reported on the PT-61. That is about $400 on a $400,000 home and about $380 on $380,000. The seller is liable, although contracts sometimes shift it.
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Intangible recording tax. Georgia charges $1.50 per $500 of the loan amount, capped at $25,000. A $360,000 loan owes $1,080; a $342,000 loan owes $1,026. A price cut saves about $54 here. A buydown saves nothing, because the loan amount is unchanged. (A newer exemption for notes maturing within 62 months, recorded on or after July 1, 2025, does not apply to a 30-year mortgage.)
These are small amounts. They are not a reason to choose on their own, but they belong in a side-by-side comparison.
Does a lower purchase price lower your Georgia property taxes?
It can, and the effect may compound. Georgia assesses property at 40% of fair market value. Under HB 581's floating homestead exemption, annual growth in a homestead's taxable value is limited to inflation, and for a new owner the base resets to current value at purchase, as Newton County explains and Ownwell describes. A lower starting value can carry forward for years. Counties could opt out of HB 581, so check with your county.
In the example, a $20,000 lower value would mean an assessed value about $8,000 lower. At an assumed 30 mills, that is roughly $240 a year. Millage varies by county, and assessors are not bound by your contract price, so treat this as possible rather than guaranteed. A buydown does nothing for property tax.
Whichever you choose, file for the homestead exemption. The statewide exemption is $2,000 off assessed value, and your application must be received by April 1 of the first year you claim it.
Which should you choose? Decision rules
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You expect to refinance or move within about five years: a price cut or a temporary buydown usually fits better. A permanent buydown's savings are lost the day that loan is paid off.
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You plan to keep this loan for the long haul and do not count on refinancing: a permanent buydown can come out ahead on monthly cost. Get real point pricing first.
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You are a first-time buyer with a tight DTI: a temporary buydown does not help you qualify. A price cut lowers the payment your lender counts.
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You need cash to close: a split, such as a smaller buydown plus a closing cost credit, may work better than putting everything into one bucket. Ask whether the builder will split the budget.
Checklist before you sign
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Get the buydown agreement in writing, including its length and step-up schedule.
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Confirm the note rate and whether the loan is fixed or adjustable.
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Ask whether the incentive requires the builder's affiliated lender, and get a competing quote anyway.
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Request side-by-side Loan Estimates for a price cut and for the buydown.
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Ask whether the base price was raised to fund the incentive, and whether the builder will split the budget between price, rate and closing costs.
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Check your loan type's concession cap (3%, 6% or 9% conventional; 6% FHA) against the offer.
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Look up your county's millage rate and HB 581 status, and put the April 1 homestead deadline on your calendar.
Related reading
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Jumbo or Piggyback on a North Fulton Home Over the Loan Limit?
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Lenders Are Already Writing $845,000 Conforming Loans in Georgia
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How Georgia's Intangible Tax Changes Your Refinance Break-Even
Sources
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NAHB: Builder Sentiment Falls on Higher Interest Rates and Costs (Sept. 2026)
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The Close: Builder Incentives Rise as Mortgage Rates Near 7% (reporting Realtor.com data)
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Norada: Builders Are Advertising ~4% Mortgages Again (reporting Realtor.com data)
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Fannie Mae Selling Guide B3-4.1-02: Interested Party Contributions
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Fannie Mae Selling Guide B2-1.4-04: Temporary Interest Rate Buydowns
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HUD: What costs can a seller or other interested party pay on behalf of the Borrower?
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Ownwell: Georgia's Floating Homestead Exemption (HB 581) Explained
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HousingWire: Why more builder discounts are not unlocking new-home demand
