How Do I Use Seller Credits to Buy Down My Mortgage Rate in Lexington, SC in 2026?

You ask the seller for a credit at closing and tell your lender to spend it on lowering your rate instead of lowering the price. Right now that's often the better deal. With the 30-year fixed rate averaging 7.40% (Freddie Mac, October 15, 2026, up from 6.27% a year ago), a credit of about $6,985 on a $309,900 Lexington home can cut your payment by $385 a month in year one. That same $6,985 taken as a price cut saves you about $46 a month.

And $309,900 isn't a random number. It was the median sale price in Lexington (CMLS Area 11) in September 2026, according to the CMLS-based report Hubrec published October 13. It also happens to be the asking price on 171 Summer Orchard Drive, a five-bedroom home our team has listed in Lexington One.

I'm Joe Michel, a Realtor with Coldwell Banker Realty on The Patrick O'Connor Team, the #1 Coldwell Banker team in South Carolina. Here's how a buydown works, what it costs, and how to ask for one without blowing up your offer.

Do Lexington sellers have room to give credits right now?

More than they did a year ago. In September 2026, Area 11 had:

• 146 closed sales, down 26.3% from September 2025
• 506 homes for sale, up 19.3%
• 52 days on market, up from 37 a year ago
• 98.5% of list price received at closing

That's about three and a half months of supply. Sellers are still getting close to asking, but homes are sitting longer and buyers have fewer competitors. A seller who's been on the market 50+ days is usually more open to "I'll pay your price if you help with my rate" than to a straight price cut. Our buyer negotiating power post goes deeper on that shift.

What is a rate buydown, in plain English?

You (or the seller) prepay interest up front so your monthly payment is lower. There are two kinds.

A temporary buydown lowers your rate for the first year or two, then it steps up to the full rate. The most common is a 2-1 buydown: 2% lower in year one, 1% lower in year two, full rate from year three on. The seller's credit goes into an account that covers the gap each month.

A permanent buydown means paying discount points so the rate is lower for the life of the loan. One point equals 1% of the loan amount. How much rate a point buys changes daily and from lender to lender.

How much does a 2-1 buydown cost on a $309,900 home?

Here's the math with 5% down (a $294,405 loan), 30-year fixed, principal and interest only:

| Year | Rate | Monthly P&I | Savings vs 7.40% | |---|---|---|---| | Year 1 | 5.40% | $1,653 | $385/mo | | Year 2 | 6.40% | $1,842 | $197/mo | | Year 3 on | 7.40% | $2,038 | none |

Total cost of the buydown: about $6,985, or roughly 2.25% of the price. That's what you'd ask the seller to credit.

Now compare it to taking the same $6,985 off the price. Your price drops to about $302,915, and your payment drops to about $1,992. That's $46 a month in savings, every year. Over the first two years, the buydown saves you about $6,985; the price cut saves you about $1,100.

The price cut does win in the long run, though, because it's permanent. So the real question is what you plan to do next.

Should I pick a temporary or a permanent buydown?

It depends on whether you expect to refinance.

A 2-1 buydown fits if you think rates will come down in the next couple of years and you'll refinance, or you expect your income to grow. You get the biggest savings right away, when moving and furnishing costs hit hardest. If you refinance early, ask your lender up front what happens to any unused buydown funds.

A permanent buydown fits if you plan to keep the loan for a long time. Here's an example, and it's only an assumption, not a quote: if one point ($2,944 on this loan) bought your rate from 7.40% to 7.15%, you'd save about $50 a month and break even in about 59 months, or just under five years. Keep the loan longer than that and you come out ahead. Refinance sooner and you lose money on the points. Your lender will price this for you on the day you lock.

A price cut fits if you're short on cash for the down payment or you're worried about the appraisal. A lower price means a lower loan and less risk of an appraisal gap. Our appraisal gap guide covers that.

How much can the seller credit me?

Your loan program sets a cap. For a conventional loan on a home you'll live in, Fannie Mae's limits are based on your down payment:

| Down payment | Max seller credit | |---|---| | Less than 10% | 3% of the price | | 10% to 25% | 6% | | More than 25% | 9% | | Investment property | 2% |

On a $309,900 home with 5% down, 3% is $9,297. A 2-1 buydown at about $6,985 leaves roughly $2,312 for closing costs. FHA loans generally allow up to 6%. VA and USDA have their own rules, so have your lender confirm before you write the offer.

Two more rules matter. A seller-paid buydown counts toward that cap. And the credit can't exceed your actual closing costs and prepaids, so any extra is lost. Our closing cost credits guide explains how to size it.

How do I ask for a buydown in my offer?

1. Talk to your lender first. Get a written quote for a 2-1 buydown and for one or two points on your exact loan. You want real numbers before you write the offer.
2. Qualify at the full rate. For most conventional loans, you're approved based on the full note rate, not the year-one rate. Make sure the year-three payment fits your budget.
3. Offer closer to list, with a credit. Sellers watch their net. Asking for full price with a $7,000 credit often lands better than a $7,000 lower offer, because the sale price on paper stays strong.
4. Write it as a seller concession in the contract, and let your lender decide how much goes to the buydown and how much to closing costs.
5. Use days on market as leverage. A home past the 52-day mark in Area 11 is a good candidate. A fresh listing with multiple showings is not.
6. Keep it inside the cap. If your credit plus buydown would go over 3%, 6% or 9%, the extra is wasted and can create underwriting problems.

What should sellers know about offering a buydown?

If you're selling in Lexington this fall, offering to pay for a buyer's buydown can draw more showings than a price cut of the same amount, because buyers shop by monthly payment. It also protects the sale price that future appraisals in your neighborhood will use. We can help you advertise it the right way. See our seller resources or the homes the team has recently sold.

FAQ

What is a 2-1 buydown? It's a temporary rate reduction: 2% below your note rate in year one, 1% below in year two, then the full rate. At 7.40%, that means 5.40%, then 6.40%, then 7.40%.

How much does a 2-1 buydown cost in Lexington, SC? On a $309,900 home with 5% down at 7.40%, it costs about $6,985, or roughly 2.25% of the price.

Can a seller pay for my rate buydown? Yes. A seller credit can fund a temporary or permanent buydown, as long as the total stays within your loan program's cap (3% to 9% for conventional loans, depending on your down payment).

Is a rate buydown better than a price reduction? For the first few years, usually yes. A $6,985 buydown saves about $385 a month in year one, while the same price cut saves about $46 a month. Over the full loan, a price cut wins if you never refinance.

Do I qualify at the lower rate with a 2-1 buydown? Usually not. Most conventional loans qualify you at the full note rate, so make sure the year-three payment fits your budget.

Are Lexington sellers giving credits right now? More of them are open to it. In September 2026, Area 11 homes averaged 52 days on market and inventory was up 19.3%, which gives buyers more room to negotiate terms.

Thinking about buying in Lexington this fall?

Joe Michel's team can help you compare a buydown, a credit and a price cut on the exact homes you're looking at, and connect you with a lender who will quote it in writing. Call or text me at 803-553-6438. You can also browse our buyer resources, read our step-by-step buying guide, or learn more about me.

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*Joseph Michel, Realtor® | SC License 130259 | Coldwell Banker Realty | The Patrick O'Connor Team, the #1 Coldwell Banker team in South Carolina | 607 Columbia Ave, Lexington, SC 29072 | 803-553-6438 | scmidlandsagent.com*

*Payment figures are principal and interest only and don't include taxes, insurance or mortgage insurance. Rates and point pricing change daily; this isn't a loan offer. Market figures are from the CMLS-based Hubrec Area 11 report and Freddie Mac's Primary Mortgage Market Survey.*