Have you noticed model-home signs in Greenville promising “limited-time rate buydowns” or “closing costs paid,” and wondered what they really mean for your budget? You are not alone. Incentives can be a smart way to make a new build more affordable, but only if you understand how they work and how to compare offers across communities. This guide breaks down common builder incentives, explains rate buydowns in plain English, and gives you a step-by-step plan to evaluate deals in Greenville. Let’s dive in.
Builder incentives you may see
Builders use incentives to speed up sales, move specific inventory, or reach quarterly goals. In Greenville, you will often see promotions tied to quick move-in homes, specific lots, or a set closing date.
Common incentive types include:
- Price reductions on select homes or “inventory closeout” specials.
- Closing-cost credits that lower your cash needed at closing.
- Rate buydowns that reduce your mortgage payment for a period or for the life of the loan.
- Upgrade credits for finishes, appliances, flooring, or design-center allowances.
- Lot premium credits that discount or waive the extra cost for certain lots.
- Preferred-lender offers such as reduced fees or special rate programs.
- Warranty or HOA fee credits for an initial period.
Incentives are usually conditional. You might need to use the builder’s preferred lender, choose a specific home, or close by a set date. Always get the exact dollar amount and terms in writing.
Rate buydowns explained
A rate buydown uses money paid at closing to reduce your mortgage interest rate. That money can come from you, the builder, or the lender. There are two main types, and each works differently for your payment and loan qualification.
- Temporary buydown: Often called a “2-1” or “1-0.” A 2-1 lowers your rate by 2 percent in year 1 and 1 percent in year 2. In year 3 you return to the full note rate.
- Permanent buydown: Also called buying points. One point equals 1 percent of your loan amount. Paying points can lower your interest rate for the entire loan term.
With a temporary buydown, funds are typically placed in an escrow account at closing and used to subsidize your payment during the lower-rate years. With a permanent buydown, the lender prices your loan at a lower rate from the start.
Temporary vs permanent buydowns
Temporary buydowns can ease the first years of ownership by lowering payments while you settle in or wait for income growth. They are helpful if you plan to refinance later or expect higher cash needs in the first two years.
Permanent buydowns reduce your rate for the full term of the loan. They can improve your qualifying payment and long-term interest costs. The tradeoff is upfront cost, often paid as points.
The better choice depends on your timeline, cash on hand, expected income, and how long you plan to keep the home and the loan.
Loan rules and concessions
When a builder pays for a buydown or closing costs, it is usually treated as a seller concession. Loan programs limit how much the seller can contribute.
- Conventional loans: Seller concession limits vary by your down payment size. Ask your lender for current Fannie Mae and Freddie Mac limits.
- FHA loans: Generally allow seller contributions up to a set percentage for closing costs. Confirm specific FHA guidelines with your lender.
- VA loans: Have their own concession rules and may limit certain seller-paid items. Verify current VA policy with your lender.
Important: Some lenders underwrite temporary buydowns at the full note rate rather than the reduced year-one payment. That affects your debt-to-income ratio and qualifying. Ask upfront how your lender will underwrite your file.
Compare offers the right way
To keep offers apples-to-apples, use three lenses: net price, monthly payment, and break-even.
- Net effective price: Subtract all builder credits from the list price. This shows what you are effectively paying for the home.
- Monthly payment comparison: Get written loan estimates and amortization schedules for each option, including any buydown. Compare both the initial payment and the long-term payment after a temporary buydown ends.
- Break-even for points: For permanent buydowns, divide the upfront cost by the monthly savings to find how many months it takes to break even. If you will sell or refinance before that, it may not pencil out.
Also consider appraisal risk. If an offer includes a large concession tied to a higher price, the home still must appraise based on comparable sales.
Negotiate with Greenville builders
Greenville communities often compete closely on price, credits, and timelines. Use that to your advantage.
- Ask whether a lender-tied incentive can be converted to a general price reduction or closing-cost credit if you prefer your own lender.
- Share competing offers from similar communities. Sales teams know local market pressures and may match or adjust.
- Target quick move-in homes if you want the strongest incentives, especially near a builder’s monthly or quarterly deadline.
- Put every incentive and condition in the purchase contract addendum. Avoid relying on verbal promises.
Greenville market factors
Local supply, months of inventory, and the number of move-in ready homes drive how aggressive incentives are. Sales offices and model homes are the best places to find current promotions in each community.
Large national builders such as D.R. Horton, Lennar, Pulte, KB Home, and Beazer have historically operated in the Greenville area, along with respected regional builders. Availability changes by neighborhood, so verify which builders are active in the specific community you like.
Remember to factor Greenville County property taxes and any HOA fees into your total monthly cost. If you are using a South Carolina assistance program, confirm how seller concessions and points interact with those rules before you sign.
Pitfalls to watch
- Hidden tradeoffs: A “free upgrade” can be offset by a higher base price. Always calculate the net effective price.
- Lender tie-ins: A preferred-lender deal can include a higher rate or extra fees elsewhere. Compare full loan estimates before you commit.
- Underwriting assumptions: If the lender qualifies you at the full note rate despite a temporary buydown, your debt-to-income could be too high. Clarify this early.
- Appraisal issues: Big concessions do not guarantee the home will appraise at the contract price. Be prepared with recent comparable sales.
Buyer checklist
Use this quick checklist before you commit to an incentive:
- What exactly is the incentive type and dollar amount?
- Who is paying for the buydown or credit, and how are funds handled at closing?
- Is the offer tied to a specific lender, home, or close date?
- What are the seller concession limits for your loan program and down payment?
- Will the lender underwrite to the note rate or the buydown payment?
- Can you combine this incentive with other promotions or assistance programs?
- What is your net effective price after all credits?
- Do you have amortization schedules and an APR comparison for each scenario?
Worked example: 2-1 buydown
Say your loan amount is $400,000 at a 6.75 percent note rate. With a 2-1 buydown, your first-year payment is calculated at 4.75 percent, your second-year at 5.75 percent, and from year three onward at 6.75 percent.
The builder deposits funds at closing to cover the interest difference between those lower payments and the note-rate payment. You enjoy lower payments in years one and two, then the payment steps up in year three. Ask your lender for a written schedule that shows the monthly payment each year and how the buydown funds are applied.
For permanent points, imagine paying 1 point on that same $400,000 loan. That costs $4,000 upfront. If the lower rate saves you $80 per month, your break-even is $4,000 divided by $80, which is 50 months. If you plan to keep the loan longer than that, a permanent buydown could be worthwhile.
Your next steps
- Tour sales offices for the Greenville communities you like and collect written incentive sheets for specific homes and timelines.
- Ask for loan estimates comparing each incentive path, including temporary buydown, permanent points, and a straight price reduction.
- Calculate net effective price and monthly payments side by side. Include taxes, insurance, and HOA.
- Review loan program concession limits with your lender to ensure your structure is eligible.
- Have an agent with construction know-how review upgrade allowances and finish choices so you maximize value.
If you want a clear, side-by-side game plan, I am here to help you compare offers and negotiate the right structure for your budget. As a hands-on Upstate agent with construction experience, I will help you read the fine print, evaluate finishes, and line up the right lender support so you can buy with confidence. Reach out to Dina Napechnik to talk through your options.
FAQs
What builder incentives are common in Greenville new construction?
- You will often see price reductions, closing-cost credits, temporary or permanent rate buydowns, upgrade allowances, lot premium credits, and preferred-lender fee reductions, usually tied to certain homes or deadlines.
How does a 2-1 rate buydown work on a Greenville mortgage?
- Your rate is reduced by 2 percent in year one and 1 percent in year two, then returns to the full note rate in year three, with buydown funds deposited at closing to subsidize those early payments.
Do builder-paid buydowns count toward seller concession limits?
- Yes, most programs treat builder-paid buydowns and closing-cost help as seller concessions, which are capped differently for Conventional, FHA, and VA loans, so confirm limits with your lender.
Is an incentive better than a lower price on a Greenville new build?
- It depends; compare the net effective price, the monthly payment with and without the incentive, and the long-term cost to see which option delivers the best value for your timeline.
Can I use my own lender and still get builder incentives in Greenville?
- Sometimes; ask whether a lender-tied incentive can be converted to a general closing-cost credit or price reduction if you prefer your own lender, and get the terms in writing.
How do Greenville property taxes affect affordability on a new build?
- Property taxes and HOA fees add to your monthly cost, so include them in your payment comparison when evaluating incentives and overall affordability.
