09/20/2026
“How in the world can a builder offer 4.99% when mortgage rates are around 7%? What’s the catch?”
Great question!!
They’re not getting some magical mortgage rate that banks refuse to give everybody else. And there’s no “catch.”
They’re PAYING for it.
A builder might spend $15,000–$30,000 of their profit to permanently buy down your rate instead of dropping the price of the house.
Why? Because they REALLY don’t want to lower prices and hurt the comparables on the other 100 houses they’re trying to eventually sell.
Big builders also usually have their own preferred lenders and do massive volume so they get discounts and other benefits.
They may have committed months ago to millions of dollars of mortgages at lower rates.
So maybe they secured 6% money, when rates were around 6.5% and now they’re spending another $15,000 buying down the rate on a $400,000 loan and…
BOOM!! 4.99%.
You can do the same thing on a resale house. The difference is somebody has to pay for it….usually through seller concessions.
So when you see a super low, below market rate, don’t ask, “How did they get that rate?”
Ask: “How much did somebody have to spend to create it?”
Because in mortgages, the rate is almost never magic.
It’s just math. And somebody always pays for the magic trick.
