The average 30-year fixed rate just hit 7.45% on Mortgage News Daily's daily index, the highest level in over a year and up more than a quarter point in a single week. You may have seen headlines this week saying rates "just crossed 7%." That's Freddie Mac's weekly survey, which is built from loan applications and runs a step behind the market. The daily numbers are much closer to what buyers are actually being quoted right now. The Fed raised its benchmark rate on September 16 for the first time this year, the 10-year Treasury is sitting around 5%, and most forecasters expect rates to stay elevated through the end of the year. If you're shopping for a home in Hilton Head, Bluffton, or Beaufort right now, that's the reality you're working with.
Here's the part that doesn't make the headlines: high rates change who has the leverage. Fewer buyers are out there, homes are sitting longer, and sellers who would have laughed at a concession request two years ago are now listening. The buyers who come out ahead in this market aren't the ones waiting for rates to drop. They're the ones who know how to use that leverage. The single most powerful way to do it is one most buyers never think to ask for.
The Big One: Ask the Seller to Buy Down Your Rate, Not Cut the Price
When a buyer has room to negotiate, the instinct is almost always to ask for a lower price. It feels like the biggest win. But when rates are high, a seller concession (a credit from the seller at closing) used to buy down your interest rate will usually lower your monthly payment about twice as much as a price reduction of the same size.
Here's why. A price cut shrinks your loan by that amount, spread over 30 years. A rate buydown uses those same dollars to pay discount points up front, which permanently lowers the interest rate on your entire loan balance for the life of the loan. The seller nets roughly the same either way. You get a very different result.
Let's run it on a realistic Lowcountry purchase: a $550,000 home with 10% down, at a 7.45% rate.
| Scenario | Loan Amount | Rate | Monthly P&I | Savings / Month |
|---|---|---|---|---|
| Full price, no concession | $495,000 | 7.45% | $3,444 | (baseline) |
| $20,000 price cut | $477,000 | 7.45% | $3,319 | $125 |
| 3% seller concession for a buydown ($16,500) | $495,000 | ~6.625% | $3,170 | $275 |
The seller gave up less money on the buydown ($16,500 versus $20,000), and you still end up saving more than twice as much every month. Over the first five years that's roughly $16,500 in payment savings versus about $7,500 from the price cut. Over the full 30 years, if you keep the loan, the buydown saves nearly $99,000 in payments.
To be fair to the price cut, it does two things the buydown doesn't: it lowers your down payment (by $2,000 in this example) and it lowers your property tax assessment a bit, since South Carolina reassesses to your purchase price. If cash to close is your tightest constraint, a price cut can make sense. For most buyers who plan to stay in the home a while, the buydown wins by a wide margin.
A note on the numbers: how far a point moves your rate changes daily with the market and varies by loan program and your credit profile. A common rule of thumb is that one point (1% of the loan amount) lowers the rate by about 0.25%, and I've used that here. Before you write an offer, I'll price out exactly what the seller's credit buys on your specific loan, so you're negotiating with real numbers, not estimates.
How Much Can the Seller Actually Give You?
Every loan program caps how much the seller (or builder, or agent) can contribute. These limits cover closing costs, prepaids like taxes and insurance, and rate buydowns combined, so if you want the seller to cover closing costs and buy down your rate, it all comes out of the same bucket.
| Loan Type | Down Payment | Max Seller Contribution |
|---|---|---|
| Conventional (primary or second home) | Less than 10% | 3% of price |
| Conventional (primary or second home) | 10% to 25% | 6% of price |
| Conventional (primary or second home) | More than 25% | 9% of price |
| Conventional (investment property) | Any | 2% of price |
| FHA | Any | 6% of price |
| VA | Any | 4% in concessions, plus normal closing costs and discount points, which generally don't count toward the 4% |
| USDA | Any | 6% of price |
Two rules trip people up. First, the seller's credit can't exceed your actual closing costs, prepaids, and buydown costs. If the seller agrees to $25,000 and your costs only add up to $19,000, you don't get a check for the difference; the excess is treated as a price reduction and can actually hurt your loan-to-value. Second, seller money can't be used for your down payment or reserves. This is why I like to size the concession before the offer goes in, not after.
For my veteran buyers: the VA rule is one of the most generous out there, since normal closing costs and discount points generally sit outside the 4% cap. With MCAS Beaufort and Parris Island right here, that's a tool a lot of Lowcountry buyers have and don't fully use. More on that in my guide to VA loans in the Lowcountry.
Where to Find Sellers Who Will Say Yes to Concessions
Not every seller is going to pay for your rate. A freshly updated home that hit the market last weekend with three showings a day probably isn't the one. The leverage lives in the listings that aren't moving, and in this market there are more of them than you might think. Here's where I tell buyers and their agents to look:
- Homes that have been sitting. Days on market is the single best clue. If a home has been listed well past the typical time for its neighborhood (in most parts of the Lowcountry right now, anything past 60 to 90 days is worth a look) and there's been no offer, the seller is starting to feel it. Have your agent ask the listing agent directly whether there's been any offer activity. The answer tells you a lot.
- Price reductions. A listing that's already been reduced once or twice tells you the seller is watching the market and willing to move. A seller who has cut the price is often just as open to a credit, and the credit usually helps you more.
- Back on market. When a contract falls apart over inspection or financing, the seller has lost weeks and is back to square one. Those homes carry a stigma they didn't earn, and sellers are often eager to get the next deal done.
- Older homes that need updates. Today's buyers want move-in ready. Homes with original kitchens and baths, dated finishes, or older roofs and HVAC systems tend to sit while the renovated house down the street goes under contract. That's your opening. You can buy the good bones, negotiate a credit that lowers your rate, and update on your own timeline. One caution: a very old roof or major system issue can affect insurance and, on FHA and VA loans, the appraisal, so let's talk before you fall in love with a project house.
- Vacant homes, estates, and relocations. A seller carrying two mortgages, handling an estate, or already living in another state is paying taxes, insurance, HOA dues, and utilities every month the house sits. Motivation is built in.
- Summer listings that didn't sell. This one is very Lowcountry. Plenty of Hilton Head and Bluffton sellers list for the spring and summer rush. If the home is still on the market as we head into fall and winter, those sellers are staring down the slow season and are usually more flexible.
- Listings that already say it. Look in the MLS remarks for phrases like "seller will contribute toward closing costs" or "rate buydown available." The seller has already told you they're willing. Your job is to make the credit as useful as possible.
What a Concession Really Costs the Seller
This is the part most sellers (and plenty of buyers) don't realize: to the seller, a $20,000 credit and a $20,000 price cut are almost exactly the same. Either way, they walk away with $20,000 less. What changes is what that $20,000 does for you.
Here's the same $550,000 home, 10% down, 7.45% market rate, with two offers that net the seller the identical amount:
| Offer | Price | Seller Credit | Seller's Net* | Your Rate | Your P&I |
|---|---|---|---|---|---|
| Price cut | $530,000 | $0 | $530,000 | 7.45% | $3,319 |
| Full price + credit | $550,000 | $20,000 | $530,000 | ~6.625% | $3,170 |
*Before commissions, payoff, and the seller's other closing costs.
In the second offer, $16,500 of the credit buys the rate down to about 6.625% and the other $3,500 goes toward your closing costs. The seller gets the price they wanted on paper and the same money in their pocket. You get a payment that's about $150 a month lower than the price cut would have given you, and help with closing costs.
To be completely transparent, there are a few small differences. Commissions and some seller closing costs are figured on the sale price, so the higher price costs the seller slightly more. On your side, you'll bring a little more for the down payment ($2,000 more in this example, largely offset by the closing cost help), and South Carolina reassesses your property taxes to the purchase price, which at the 4% legal residence rate in unincorporated Bluffton works out to roughly $100 a year. (More on how that works in my guide to South Carolina property taxes.) Those are small numbers next to a lower rate on your entire loan.
The one real limit is the appraisal. The home has to appraise at the contract price, so you can't simply pile a big credit on top of an inflated price. A credit on a fairly priced home is the sweet spot.
How to Structure the Offer: Going in Low and Asking for Credits
This is where most of my conversations with buyers happen. On a home that's been sitting, you usually want both a lower price and a credit. That's completely reasonable, but how you present it makes a big difference in whether the seller says yes. Here's an example on that same $550,000 listing that's been on the market for four months:
| Offer Terms | Amount |
|---|---|
| Offer price | $535,000 |
| Seller contribution (3% of price) | $16,050 |
| Seller's net before commissions and costs | $518,950 |
| Credit used for 3 discount points | $14,445 (rate ~7.45% to ~6.70%) |
| Credit applied to closing costs | $1,605 |
| Your P&I (vs. $3,444 at full price and 7.45%) | $3,107 |
That's $337 a month less than paying full price at today's rate. Here's how I recommend putting an offer like that together:
- Talk to me before the offer goes in. I'll estimate your closing costs and prepaids, then price out exactly what different credit amounts buy on your rate. That tells you the right number to ask for, and it keeps you from asking for more than you can actually use.
- Lead with the seller's net, not the price. Sellers react to the headline number, but what they live on is the net. Have your agent present the offer with a simple net comparison so the seller sees what they actually walk away with. A $535,000 offer with a $16,050 credit reads very differently when the seller can compare it to their other options, especially after months with no offers.
- Back up the number. Days on market, price reductions, recent comparable sales, and the updates the home needs are all fair reasons for your offer. A low offer with a reason behind it gets countered. A low offer with no reason gets ignored.
- Decide what matters more before the counter comes back. If the seller pushes back, my advice is usually to give on price before you give on the credit. A few thousand dollars in price barely moves your payment; the credit is what buys your rate down.
- Get the contract language right. Write the credit as a dollar amount or a percentage of the price, and make sure it can be used for "closing costs, prepaids, and discount points or rate buydown." If the contract only says "closing costs," it can limit how the credit is used.
- Stay inside your program's limit. Asking for 6% on a conventional loan with 5% down doesn't work; the cap is 3%. And the credit can't be more than your actual closing costs, prepaids, and points, so anything over that is wasted.
- Turn inspection repairs into a credit. If the inspection turns up issues, ask for an additional credit rather than having the seller make repairs. Just have it written as a seller contribution toward your closing costs and prepaids rather than a "repair credit," since lenders generally won't let repair money be paid out to you at closing. It all has to fit under the same program limit, so leave room for it when you write the original offer.
- Lock the buydown in with your rate. Discount points are paid at closing, so the buydown needs to be priced and locked along with your rate, not figured out at the closing table.
For agents: if you've got a listing sitting on the market, a seller-paid buydown can move it faster than a price drop and cost your seller the same or less. I'm glad to put together a net sheet and payment comparison your buyers can see before they ever write an offer.
What About a 2-1 Temporary Buydown? Why It's Not My Go-To
Everything above is a permanent buydown: the lower rate lasts for the life of the loan. You'll also hear a lot about temporary buydowns right now, especially the 2-1 buydown, where your payment is calculated at 2% below your note rate in year one, 1% below in year two, and then goes to the full rate from year three on. On the same $495,000 loan at 7.45%:
| Period | Effective Rate | Monthly P&I |
|---|---|---|
| Year 1 | 5.45% | $2,795 |
| Year 2 | 6.45% | $3,112 |
| Years 3 to 30 | 7.45% | $3,444 |
It looks great for the first year. But here's how I explain it to my clients, and why it's rarely what I recommend:
- It's just prepaid interest. The roughly $11,800 it costs to fund that 2-1 buydown goes into an escrow account and gets drawn back out to cover part of your payment for 24 months. It doesn't lower your rate at all. It's your own interest, paid in advance, dollar for dollar.
- The payment resets. In year three your payment jumps to the full amount and stays there for the next 28 years. In this example that's about $650 a month higher than what you got used to in year one. I don't love setting clients up for that.
- It doesn't help you qualify. You're underwritten at the full note rate either way, so it doesn't buy you any more house.
If the seller is willing to put $11,800 on the table, I'd almost always rather see that money work for you another way: as a permanent buydown that lowers your rate for the life of the loan, or as a credit toward your closing costs and prepaids so you keep that cash in your pocket at closing. Either one is real money. A temporary buydown is mostly a head start on payments you'd be making anyway.
Four More Ways to Win in a High-Rate Market
1. Put new construction builders to work
Builders in Hardeeville, Okatie, and the Highway 170 corridor have more inventory to move and more margin to work with than individual sellers. Rate buydowns and closing cost credits are some of the most common incentives out there right now. If a builder offers a 2-1 temporary buydown, ask whether the same dollars can go toward a permanent buydown or your closing costs instead; for the reasons above, that's usually the better deal. Just read the fine print: many of these incentives require using the builder's preferred lender, and the "free" buydown can come with higher fees or a less competitive rate elsewhere in the deal. I break this down in my post on whether to use the builder's lender, and I'm always happy to run a side-by-side comparison.
2. Shop the rate, not just the house
When rates are high, the spread between lenders gets wider, not narrower. A quarter point on a $495,000 loan is roughly $85 a month. As a broker, I shop your loan across multiple wholesale lenders instead of offering you one bank's rate sheet, which is exactly when that matters most. You can check today's market benchmarks on my rates page, then let me show you what's available for your specific scenario.
3. Ask about an ARM, but check the spread first
In a normal market, a 5-year or 7-year adjustable rate mortgage starts meaningfully lower than a 30-year fixed, which makes it attractive for buyers who expect to sell or refinance within that window. Right now, though, some ARMs are pricing at or near fixed rates, which removes most of the benefit. It's worth a quote, especially on jumbo loans where the math sometimes looks different, but don't take on adjustment risk unless the discount is real.
4. Lock smart
Rates jumped more than a quarter point in a single week this month. Once you're under contract, a well-timed lock protects you from that kind of swing. Ask about a float-down option, which lets you capture a lower rate if the market improves before closing. It isn't free, and it isn't always worth it, but in a market this volatile it's worth pricing out.
Frequently Asked Questions
Is a rate buydown better than a price reduction?
For most buyers who plan to keep their loan for several years, yes. In the example above, a $16,500 seller concession used for a buydown saved about $275 a month, while a larger $20,000 price cut saved about $125. A price cut does lower your down payment and taxes slightly, so if cash to close is your biggest hurdle, it can still be the right move.
How much can the seller contribute?
It depends on your loan: 3% to 9% on conventional loans based on your down payment (2% for investment properties), 6% on FHA and USDA, and 4% on VA with normal closing costs and discount points generally excluded from that cap. The credit can't exceed your actual costs.
How do I find sellers who will give concessions?
Look for homes that have been on the market well past the norm for their neighborhood, homes with price reductions or that came back on market after a failed contract, older homes that need updates, vacant or estate properties, and summer listings still unsold in the fall. MLS remarks that mention seller contributions are another giveaway.
Does a concession cost the seller more than a price cut?
Almost never by much. A $20,000 credit and a $20,000 price cut leave the seller with nearly the same net. The only differences are small ones, like commissions calculated on the higher price. For you, the credit can buy down your rate and cut your payment far more than the price cut would.
What's a 2-1 buydown?
A temporary buydown that lowers your payment by the equivalent of 2% in year one and 1% in year two, funded up front by the seller or builder. From year three on, your payment resets to the full note rate. Since it's really just prepaid interest, I usually recommend putting that money toward a permanent buydown or your closing costs instead.
Should I wait for rates to come down?
Nobody can promise when that will happen, and forecasts see rates staying elevated through year end. Right now buyers have negotiating leverage that tends to disappear once rates fall and competition returns. If the right home and the right payment line up today, waiting has costs too.
High rates are frustrating, but they're not the whole story. The buyers I'm working with right now are getting sellers to pay for their rate, landing credits that wouldn't have been on the table two years ago, and walking into payments they're comfortable with. If you're house hunting in the Lowcountry and want to know exactly what a concession would do for your payment, let's run your numbers before you write an offer.
This article is general information, not a commitment to lend or a rate quote. Rate data referenced is from Mortgage News Daily's daily rate index as of September 24, 2026 (30-year fixed at 7.45%), along with Freddie Mac's Primary Mortgage Market Survey for the same week. Payment examples show principal and interest only and are illustrative; actual rates, discount point pricing, and buydown costs change daily and depend on loan program, credit, down payment, and property type. Seller contribution limits reflect current Fannie Mae, Freddie Mac, FHA, VA, and USDA guidelines and are subject to change. All loans subject to underwriting approval.