Rate Buydowns and Seller Concessions in Seattle: What Points Buy

A mortgage rate buydown Seattle buyers are offered comes in two forms that behave nothing alike: a permanent buydown, where you pay discount points at closing to lower the note rate for the life of the loan, and a temporary buydown, where a funded escrow account subsidizes your payment for the first year or two while the note rate never changes at all. Both are usually paid for with seller or builder money, and how much of that money is even allowed is governed by a contribution cap most buyers have never heard of.

This comes up constantly right now. A listing on Capitol Hill or in Wallingford sits a few weeks longer than the seller expected, the seller does not want to drop the asking price on the record, and the counter that comes back offers to pay some of your closing costs instead. Your agent asks whether you want that money spent buying the rate down.

It is a real question with a real answer, and the answer depends on how long you plan to keep the loan. What follows is the mechanics of each structure, the caps that limit what a seller can actually contribute, and the honest comparison between spending a concession on the rate versus taking it as a lower price. No rate quotes here, because pricing changes daily and anything I printed would be wrong by the time you read it. What does not change is the math for deciding.

What a Mortgage Rate Buydown Seattle Sellers Offer Actually Is

A buydown means money changes hands up front so that the interest cost is lower later. That is the whole idea. Everything else is a question of who pays, how long the benefit lasts, and whether the note rate on your promissory note is genuinely different.

The distinction that matters most: a permanent buydown changes the note rate. A temporary buydown does not. With a temporary structure, your loan is written at the full rate, and a separate escrow account funded at closing covers the difference between the full payment and a reduced payment for a set period. When that account runs out, your payment steps up to what it always was on paper.

Both structures are legitimate. Both get oversold. The failure I see is a buyer who paid for something whose benefit they will never collect, either because they refinanced eighteen months later or because they moved before the break-even ever arrived.

Permanent Buydowns: Paying Points for the Life of the Loan

Discount points are prepaid interest. One point equals one percent of the loan amount, paid at closing, in exchange for a lower note rate. On a $700,000 loan, one point is $7,000. The CFPB explains the mechanic plainly, and the key phrase in their explanation is the one people skip: you are prepaying interest, so the value depends entirely on how long you pay interest on that loan.

How much rate a point buys is not fixed. It moves with the market, with your loan program, with the loan size, and with occupancy. Some days a point buys meaningfully more than others. That variability is exactly why the decision has to be run on the actual numbers on your Loan Estimate rather than on a rule of thumb.

The evaluation is a break-even, and it has two lines:

• What the points cost, in dollars, at closing. Take it off your Loan Estimate, not off a conversation.
• What the monthly principal and interest actually drops by. Compare the same loan amount, both ways, on the same day.

Divide the first by the second and you get the number of months it takes to recover the cost. Then answer one question honestly: will you still have this loan then? Not this house, this loan. A refinance ends the benefit just as surely as a sale does, which is why buying points down heavily makes the least sense in a stretch when people expect to refinance.

Two things worth knowing. Points are generally refundable to nobody once paid, so an early payoff simply forfeits the remainder of the benefit. And when the seller pays the points rather than you, the break-even question changes shape entirely, which is the section below.

Temporary Buydowns: How the 2-1 and the 1-0 Work

A temporary buydown is a payment subsidy, not a rate. In a 2-1, your payment in year one is calculated as if the rate were two percentage points lower, and in year two as if it were one point lower. In year three the subsidy is gone and you pay the full note payment for the remaining term. A 1-0 does the same thing for a single year.

The money to fund that subsidy is deposited into an escrow account at closing, and the total is simply the sum of every monthly difference over the subsidized period. On a large central Seattle loan that is a substantial number, which is why temporary buydowns are almost always seller-paid or builder-paid rather than buyer-paid.

Three points of fine print that decide whether this is good for you:

• You are generally underwritten at the full note rate, not the subsidized rate. The temporary buydown does not help you qualify for more house. That surprises people who assumed it would.
• Unused funds are typically applied to the loan if you refinance or sell before the subsidy period ends, rather than being handed back to you as cash. Treatment varies by lender and program, so confirm it in writing.
• Program eligibility varies. Occupancy type, loan program, and property type all affect whether a temporary structure is permitted at all, and investor rules change.

Who is a temporary buydown genuinely good for? A buyer with a documented income increase arriving on a known schedule, someone carrying a short-term cost that ends soon, or a buyer who has honestly concluded they will refinance if pricing improves and wants relief in the meantime without paying for a permanent change. Who is it bad for? Anyone who needs the year-three payment to be affordable and is quietly hoping something will change by then. Look at the year-three payment first, before the year-one payment. If that number does not work, nothing else about the structure matters.

Concession Caps Limit Every Mortgage Rate Buydown Seattle Sellers Fund

Here is the part almost no buyer knows going in. There is a ceiling on how much a seller, a builder, an agent, or anyone else with a stake in the transaction may contribute toward your closing costs and prepaid items. In the industry these are called interested party contributions, and the cap depends on your loan program, your occupancy, and on conventional loans, your down payment.

Exceed the cap and the excess does not simply get refunded to you. It generally has to come out as a price reduction or be removed from the transaction, which means finding out about it two days before closing is a genuinely bad afternoon.

Illustrative summary of commonly applied contribution limits, current as of August 2026, subject to change. Limits, the definition of value, which costs count toward the cap, and lender overlays vary by program, investor, occupancy, and property type. Verify against the governing source for your loan: the Fannie Mae Selling Guide on interested party contributions, HUD Handbook 4000.1 for FHA, or the VA Lenders Handbook. Confirm your specific cap with your loan officer before the offer is written.

One practical note on jumbo files. In King County the 2026 conforming loan limit for a one-unit property is $1,063,750, so plenty of central Seattle purchases sit above it and land in jumbo territory where contribution rules are investor-specific rather than published. My guide to Seattle jumbo mortgages covers how those files differ, and high-balance versus jumbo in King County explains which side of the line you are on.

Buydown or Price Cut: How to Compare the Same Dollar Two Ways

This is the decision people actually face, and it is worth setting up carefully. A seller has agreed to give up a fixed amount of money. You can direct it toward buying the rate down, or you can take it as a reduction in the purchase price. They are not equivalent.

An illustrative example. Say you are buying a Capitol Hill townhome at $850,000 with twenty percent down, so the loan is $680,000, and the seller agrees to contribute $17,000. Two ways to use it:

Illustrative example only, current as of August 2026, subject to change. Point cost, the rate reduction a point buys, subsidy amounts, and eligibility vary daily and by loan program, loan amount, occupancy, and property type. Actual figures come from your Loan Estimate. Subject to qualification, credit approval, and underwriting.

The pattern underneath the table is worth stating directly, because it holds regardless of what pricing does. A concession spent on a permanent buydown usually produces a larger monthly payment reduction than the same dollars applied to the price, because the price cut only shrinks the loan by the portion you were financing while the buydown works against the whole balance. But the price cut delivers its benefit on day one and never has to be earned back, while the buydown has a break-even that a sale or a refinance can arrive before.

So the tiebreaker is your timeline, and specifically your loan's timeline. Longer than the break-even, take the buydown. Shorter, or genuinely uncertain, take the price. And if the concession is large enough to exceed your program's cap, the excess has to go to price anyway, so the cap sometimes makes the decision for you.

Two things I will not tell you to factor in, because they are not mine to advise on. The deductibility of points is a question for your CPA, full stop. And how a lower price affects your negotiating position or the contract terms is a question for your broker.

Timing: A Mortgage Rate Buydown Seattle Buyers Choose Interacts With the Lock

Points are quoted against a specific rate on a specific day, which means the buydown decision and the rate lock decision are the same decision made at the same moment. You cannot sensibly evaluate points on Tuesday and lock on Friday and expect the numbers to hold.

A few sequencing notes that save real money:

• Decide the structure before the offer is written, not after. The concession amount and how it may be used are terms of the purchase and sale agreement. Adding a buydown afterward means amending the contract.
• Get the cap confirmed first. Negotiating a concession larger than your program permits wastes leverage you could have spent on price.
• Watch a long escrow. On new construction or an extended closing, the lock period, extension costs, and the buydown pricing all interact. My Eastlake market and rate read covers how I think about that timing.
• Remember the appraisal. Contribution caps are generally measured against the lesser of price or appraised value, so a value that comes in under contract price can shrink the allowable concession. That is one more reason to understand your options on a low appraisal in Seattle before you are in one.

Where the Concession Might Be Better Spent Than on a Buydown

Sometimes the right answer is neither the rate nor the price. A seller contribution can also cover ordinary closing costs and prepaid items, and for some buyers that is worth more than either alternative.

If the concession preserves cash you would otherwise bring to closing, and that cash is the difference between a comfortable reserve position and an empty account in a new home, take the closing costs. Reserves are also a qualifying factor on many files, so the money can do double duty. My breakdown of closing costs in Seattle covers what actually sits on that side of the ledger, including the Washington excise tax that lands on the seller.

Another case: if a slightly larger down payment would move you across a loan-to-value threshold and eliminate mortgage insurance, the concession dollars may be better spent getting you there. That is a comparison worth running explicitly, and my guide to removing PMI in Seattle explains what those thresholds are and when they release you.

How I Run a Mortgage Rate Buydown Seattle Comparison for Clients

The process is not complicated, it is just specific. I need the purchase price, the loan amount, the occupancy, the program, and the concession on the table. From there I price the file three ways on the same day so the comparison is apples to apples, because pricing pulled on different days is not a comparison at all.

Then I put four numbers in front of you: the cost at closing, the monthly payment under each structure, the break-even in months on the permanent option, and the year-three payment on the temporary option. I have had clients look at the year-three payment and immediately choose the price reduction instead, which was the right call and would not have been obvious from a summary that led with the year-one payment.

I will also tell you when the answer is that the buydown is not worth doing. If you are reasonably likely to refinance within a couple of years, prepaying interest for thirty is a poor trade, and I would rather say so than book a slightly larger loan. If you are early in the process, start with mortgage pre-approval in Seattle, since the concession conversation only becomes real once you are writing offers. The Capitol Hill mortgage hub and the Eastlake hub collect the neighborhood-specific pieces alongside this one.

A buydown is a tool. Like every tool, it is worth exactly what the job requires and nothing more.

Frequently Asked Questions About a Mortgage Rate Buydown Seattle Buyers Consider