Several Southern Nevada builders' financing ads this fall lead with a year-one rate. On October 8, 2026, Lennar's Las Vegas Fall Super Sale page advertised a conventional loan at 2.875% in year one, 3.875% in year two and 4.875% after that, and Toll Brothers' Nevada page advertised a 4.75% first-year rate on a jumbo 5/1 adjustable-rate loan "with 2/1 Buydown on Select Homes." Those headline rates are real, but they describe a payment schedule, not the loan. The number that decides what you pay for the next 28 years is the note rate underneath, and the number that decides whether the deal is good is what the same builder money would have done as a price cut.
I rebuilt this guide from primary sources on October 8, 2026, because the May version leaned on rate assumptions and builder-cost estimates that no longer hold. Every rule below is quoted from the agency that writes it, Fannie Mae's Selling Guide, HUD's FHA handbook and the VA's own buydown page, and every payment is calculated at a named rate so you can check the arithmetic yourself. The builder offers are the builders' own advertised terms, read in a browser on the date shown. Nevada Real Estate Group is a brokerage, not a lender, so nothing here is a rate quote; it is the math and the rules you need before a sales office walks you through year one.
A 2-1 buydown is builder or seller money held in escrow that cuts your rate 2 points in year one and 1 point in year two, then stops. On a $400,000 loan at Freddie Mac's 7.40% average for October 8, 2026, that escrow totals $9,504. You still qualify at the full note rate. If you will keep the loan, the same dollars as a price cut leave you ahead, so ask for both offers in writing.
- At 7.40% on $400,000, a 2-1 escrow holds $9,504: $524 a month, then $268.
- Fannie Mae, FHA and VA all qualify you at the note rate, never the bought-down rate.
- Builder-paid buydowns count toward caps: 3%, 6% or 9% conventional, 6% FHA, 4% VA.
- On October 8, 2026, Lennar's Las Vegas sale stacked a 2-1 on a 4.875% permanent rate.
- Equal dollars as a price cut stay ahead long term; the buydown wins only early cash flow.
What Is a 2-1 Buydown, and Who Really Pays for It?
A 2-1 buydown is a temporary subsidy of your mortgage payment, not a change to your mortgage. Someone, usually the builder on new construction or the seller on a resale, deposits a lump sum at closing. For the first 12 months the servicer draws from it to cover the gap between your payment at 2 percentage points below the note rate and the full note-rate payment; in year two the gap is 1 point. In month 25 the account is empty and you pay the note rate for the rest of the term.
According to Fannie Mae's Selling Guide topic B2-1.4-04, Temporary Interest Rate Buydowns (dated August 7, 2024, in the Guide published October 7, 2026), the plan must be a written agreement between the funder and the borrower, and "in no event may the buydown plan change the terms of the mortgage note." The money sits in a custodial bank account, fully funded before the loan is sold, and your only interest in it is to have it applied to payments as they come due. So your note says the full rate from day one, and you remain responsible for the full payment if the funds are unavailable for any reason. The VA's temporary buydown page shows the mechanics: on a 5% note, the veteran pays $1,265 in year one while the escrow adds $345, then $1,432 plus $178, then the full $1,610 from year three.
Who pays matters more than the mechanics. Fannie Mae's topic B3-4.1-02, Interested Party Contributions (dated May 7, 2025) treats the builder as an interested party, and "any affiliate of the above," which includes a builder-owned mortgage company. According to Freddie Mac research published July 31, 2023, "nearly two out of three" temporary buydowns it studied were 2-1s, borrowers who took one "received interest rates that were 15 basis points higher on average" from June 2022 to June 2023, 12 lenders handled 80% of them, and the product was "especially popular in the financing of new homes, since home builders, who generally partner with mortgage company affiliates, can simultaneously negotiate the sale price and the mortgage." Treat those as a 2022–2023 snapshot, not a description of any Las Vegas builder today.
None of that makes a builder buydown bad. It means the comparison is never "buydown versus nothing." The CFPB puts it plainly: consumers "should compare the costs for loans with and without the temporary reduced rate." Our guide to builder closing cost credits covers the other half of most incentive packages.
How Much Does a 2-1 Buydown Save at Today's Rates?
The subsidy is pure arithmetic once you name the note rate, so I use the newest national benchmark. According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed rate averaged 7.40% as of October 8, 2026, up from 7.28% the week before, and the survey is published each Thursday. That is a national average of offered rates, not a quote; your lender's number will differ. Using it as the note rate keeps the example honest about where the market sat when this page was updated.
The worked example is a $500,000 new home with $100,000 down, so the loan is $400,000 on a 30-year term. All payments are principal and interest only, rounded to the dollar.
| Period | Rate you pay | Your monthly payment | Escrow pays each month | Escrow drawn in the period |
|---|---|---|---|---|
| Months 1–12 | 5.40% | $2,246 | $2,770 − $2,246 = $524 | $524 × 12 = $6,288 |
| Months 13–24 | 6.40% | $2,502 | $2,770 − $2,502 = $268 | $268 × 12 = $3,216 |
| Month 25 onward | 7.40% (note rate) | $2,770 | $0 | $0 |
| Total subsidy | Deposited at closing by whoever funds the buydown | $6,288 + $3,216 = $9,504 | ||
So the honest size of this buydown is $9,504. It scales almost exactly with the loan: at the same 7.40% note, a $300,000 loan carries a $7,104 subsidy ($392 a month, then $200), a $500,000 loan carries $11,856 ($654, then $334), and an $800,000 loan carries $18,984 ($1,047, then $535). If you check our sister guide on rate buydowns versus rate locks, you will see $10,488 for a $450,000 loan; that guide uses a round 7.00% note, and the same arithmetic at 7.00% gives the same $10,488, so the two pages agree once you match the inputs.
Notice what the table does not contain: a "builder cost" lower than the subsidy. The May version of this post estimated the builder's true cost at a discount to the buyer's savings. I could not find a primary source for that, and Fannie Mae requires the custodial account to be fully funded and the dollar amount to be "consistent with the terms of the buydown period," so I removed it.
What Do Fannie Mae, FHA and VA Rules Say About Temporary Buydowns?
The three programs most Las Vegas new-construction buyers use agree on the big things and differ on the details that trip up files. I read each one on October 8, 2026.
Fannie Mae allows temporary buydowns "on fixed-rate mortgages and certain ARM plans for principal residences or second homes provided the rate reduction does not exceed 3%, and the rate increase will not exceed 1% per year," with a buydown period no longer than three years (Selling Guide B2-1.4-04). Investment properties and cash-out refinances are ineligible. Fannie Mae places no limit on the dollar amount, but it labels any buydown deeper than 2 points or longer than two years a "significant" buydown, which carries pooling restrictions for the lender.
FHA is stricter. According to HUD's Single Family Housing Policy Handbook 4000.1, in the version issued August 12, 2026, temporary buydowns are not permitted with refinance transactions or with adjustable-rate mortgages, the lender must establish an escrow for the buydown (section II.A.6.a.ix), and the escrow agreement may not let undistributed funds revert to the provider if the home is sold or the loan is prepaid.
According to the VA's temporary buydown page, a buydown can be used on "all fixed-rate VA home loans, including purchase loans, cash-out refinances, and interest rate reduction refinancing loans," funded by "the seller, lender, builder, or Veteran," lasting one to three years, with payment increases capped at 1% a year.
| Rule | Fannie Mae conventional | FHA | VA |
|---|---|---|---|
| Rate you qualify at | Note rate, "without consideration of the bought-down rate" | Note rate for principal and interest | Full payment after the buydown ends |
| Deepest cut and longest term | 3 points, 3 years, 1 point a year | No depth or term limit appears in Handbook 4000.1 | 1 to 3 years, 1% a year |
| Eligible loans | Fixed and certain ARMs; principal and second homes | No ARMs, no refinances | All fixed-rate VA loans, including refinances |
| Builder or seller cap | 3%, 6% or 9% by LTV; 2% investment | 6% of the sales price | 4% of reasonable value |
| Leftover funds at payoff | Credited to payoff, or returned to borrower or lender per the agreement | Cannot revert to the provider | Applied to the debt; cannot go back to the funder |
The row buyers misread most is the last one, and I cover it below, because the May version of this post had it backwards.
Do You Qualify at the Bought-Down Rate or the Note Rate?
You qualify at the note rate, under every program a typical Las Vegas new-construction buyer uses. Fannie Mae's wording is the plainest: "the lender must qualify the borrower based on the note rate without consideration of the bought-down rate" (Selling Guide B2-1.4-04). HUD's handbook tells the FHA lender to "use the Note rate when calculating principal and interest for Mortgages that involve a temporary interest rate buydown" (Handbook 4000.1, section II.A.4.a.iii). The VA's page says lenders "are required to base their qualification decision on the full monthly payment amount that the borrower will owe after the temporary buydown period ends," and adds that underwriters "may consider the temporary buydown as a compensating factor." Freddie Mac's research summarizes it the same way: "No matter the type of buydown, lenders must qualify the homebuyers at the full interest rate."
In the worked example, your year-one payment is $2,246, but the debt-to-income ratio is built on $2,770 plus taxes, insurance and any HOA dues. The buydown buys breathing room in the budget, not a bigger approval. If a salesperson tells you a buydown "lets you afford more house," ask them to show you the underwriting payment on the lender's worksheet.
This is also where a price cut quietly beats a buydown for a stretched buyer. A $9,504 price cut lowers the loan and therefore the qualifying payment, by about $66 a month at 7.40%, while the $9,504 buydown lowers it by nothing. If you are within a few dollars of a lender's ratio limit, that difference can decide the file.
According to FHFA's November 25, 2025 announcement, the 2026 conforming limit for a one-unit home is $832,750 across most of the country, and FHFA's county list shows the same $832,750 for Clark County. A conventional loan above it is a jumbo, and Fannie Mae's rules above are replaced by the lender's own. The May version of this post stated the limit as $766,550, which was out of date. If you are shopping luxury communities such as The Ridges, MacDonald Highlands, Ascaya or Seven Hills with a jumbo loan, ask the lender in writing what rate it qualifies you at and whether the buydown applies to an adjustable-rate loan.
How Much Builder Money Can a Buydown Use Before It Hits the Cap?
Every builder or seller dollar that pays for your rate competes with every other dollar the builder pays on your behalf. Fannie Mae's maximum financing concessions are "calculated using the lower of the sales price or appraised value (not the loan amount)": 3% when your loan-to-value ratio is above 90%, 6% from 75.01% to 90%, 9% at 75% or less, and 2% on an investment property (Selling Guide B3-4.1-02). Concessions above the limit "are considered sales concessions and must be deducted from the property's sales price," which lowers the value your loan is measured against.
Government loans use flat caps. According to HUD's handbook, interested parties "may contribute up to 6 percent of the sales price," and that limit "also includes" payment "for permanent and temporary interest rate buydowns" (Handbook 4000.1, section II.A.4.d.iii). The VA's page says buydowns "provided by the builder or seller are considered a seller concession," and "seller concessions, or seller contributions, are capped at 4% of the reasonable value." Closing costs work differently on a VA loan: the VA's funding fee and closing costs page says "We don't limit credits for a loan's closing costs," so the 4% is room for the buydown and other concessions, not for ordinary closing costs.
Here is how that plays out on the $500,000 example, using the same 7.40% note rate.
| Loan and down payment | Cap | Dollars of room | 2-1 subsidy at 7.40% | Room left for closing costs |
|---|---|---|---|---|
| Conventional, 20% down ($400,000 loan) | 6% | $500,000 × 6% = $30,000 | $9,504 | $30,000 − $9,504 = $20,496 |
| Conventional, 5% down ($475,000 loan) | 3% | $500,000 × 3% = $15,000 | $11,280 | $15,000 − $11,280 = $3,720 |
| FHA (cap on sales price) | 6% | $500,000 × 6% = $30,000 | Depends on the FHA loan amount | $30,000 minus the subsidy |
| VA (cap on reasonable value) | 4% | $500,000 × 4% = $20,000 | Depends on the VA loan amount | VA does not limit seller credits for closing costs; the $20,000 covers the subsidy and other concessions |
The 5%-down row is the one that surprises people. A $475,000 loan at 7.40% has a $3,289 note-rate payment, $2,667 in year one and $2,971 in year two, so the 2-1 subsidy is 12 × $622 + 12 × $318 = $11,280. That leaves only $3,720 of the 3% cap for title, escrow and lender fees.
One more rule matters when a builder advertises a rate far below the market. Fannie Mae's same topic says standby or forward commitments "between a builder and lender for blanket interest rate coverage that are executed prior to signing a sales contract with a borrower are not subject to Fannie Mae's maximum financing concessions because they are not attributable to the specific loan transaction." Toll Brothers' Nevada offer, by contrast, states that its "incentives [are] subject to maximum interested party contribution limits based on loan program and down payment." Ask your builder's lender which kind of money is behind your rate, because under Fannie Mae's rules only one of them uses your cap. Our seller concessions guide walks through the same caps for resale purchases.
Is a Builder-Paid 2-1 Buydown Better Than the Same Dollars Off the Price?
This is the question the competitor articles skip, so here is the arithmetic on equal dollars. Path A: the builder funds the $9,504 buydown on the $400,000 loan. Path B: the builder cuts the price by $9,504 instead, you keep the same $100,000 down payment, and the loan falls to $390,496 at the same 7.40% note rate, a payment of $2,704, or $65.80 a month less than $2,770 before rounding.
| Measure | 2-1 buydown | $9,504 price cut |
|---|---|---|
| Monthly relief, year one | $524 | $66 |
| Monthly relief, year two | $268 | $66 |
| Monthly relief, month 25 onward | $0 | $66 for the rest of the loan |
| Payment savings after 24 months | $9,504 | $65.80 × 24 = $1,579 |
| Less owed after 24 months | $0 | $392,192 − $382,874 = $9,318 |
| Savings plus lower balance at month 24 | $9,504 | $1,579 + $9,318 = $10,897 |
| Payment savings over 30 years | $9,504 | $65.80 × 360 = $23,688 |
| Lowers the qualifying payment? | No | Yes |
On equal dollars, the price cut is ahead from the first month if you count what you owe, because you start with $9,504 less debt and stop paying 7.40% interest on it. The buydown never catches up after month 24. Counting payments alone, the price cut's $65.80 a month passes the buydown's $9,504 in month 145, about 12 years in.
The buydown wins on timing. It puts eight times as much cash back in your pocket in year one, $524 against $66 a month, and that matters if you are carrying two housing payments while an out-of-state home sells, or if you expect your income to rise in a defined way. It can also win when the dollars are not equal, so ask for both numbers rather than assuming a builder will convert one into the other. If the alternative to a $9,504 buydown is a $5,000 price cut, the same arithmetic says the buydown stays ahead on payments plus balance until about month 160, more than 13 years in.
One argument for price cuts you may hear does not hold in Nevada: that a lower price lowers your property tax. Under NRS 361.227, the assessor values land at full cash value and improvements at replacement cost minus depreciation, so your contract price is not the input. I took that claim out of the FAQ. Our breakdown of builder price cuts on quick move-in homes shows what those reductions looked like in September.
When Does a Permanent Buydown Beat a 2-1?
A permanent buydown is discount points: money paid at closing to lower the note rate for the life of the loan. According to the CFPB's explanation of points and lender credits, "one point equals one percent of the loan amount," and "the amount that your interest rate is reduced depends on the specific lender, the kind of loan, and the overall mortgage market." The CFPB's own example, a $180,000 loan at 5.0% with zero points, shows 0.375 points ($675) buying a 4.875% rate. That is an illustration, not a rule, so I do not assume an exchange rate below. Instead, the table answers the question you can put to any lender: how big a permanent cut would the same $9,504 have to buy to beat the 2-1 within your holding period?
| If you keep the loan | Monthly savings needed | Permanent rate cut needed | Resulting note rate |
|---|---|---|---|
| 2 years | $9,504 ÷ 24 = $396 | about 1.50 percentage points | about 5.90% |
| 3 years | $9,504 ÷ 36 = $264 | about 0.99 percentage points | about 6.41% |
| 5 years | $9,504 ÷ 60 = $158 | about 0.59 percentage points | about 6.81% |
| 7 years | $9,504 ÷ 84 = $113 | about 0.42 percentage points | about 6.98% |
| 10 years | $9,504 ÷ 120 = $79 | about 0.29 percentage points | about 7.11% |
Read it as a test. Ask the builder's lender, and an outside lender, to price the same loan two ways on the same day: the note rate with the 2-1 and no points, and the note rate with the same builder dollars applied as points. If the permanent option drops the rate by more than the cut listed for your realistic holding period, the permanent buydown wins. If you are honest that you will refinance in two years, almost no permanent buydown can win, because it would have to cut the rate by about 1.50 percentage points.
The CFPB's advice on choosing is worth following literally: if you are unsure how long you will keep the loan, ask a loan officer "to calculate the total costs over a few different possible timeframes," the shortest, the longest and the most likely. Our sister guide on rate buydowns versus rate locks runs the same breakeven logic for buyer-paid points and explains why the quarter-point-per-point figure you hear is a convention, not a promise.
What Were Las Vegas Builders Actually Advertising on October 8, 2026?
I read three builders' financing offers in a browser on October 8, 2026. These are the builders' own advertised terms, quoted from their pages; they change weekly, and each has conditions I summarize but you should read in full before you sign anything.
| Builder offer | Advertised rate structure | Signing and closing window | Key conditions |
|---|---|---|---|
| Lennar Fall Super Sale, greater Las Vegas | Conventional 2-1: 2.875%, 3.875%, then 4.875% (4.968% APR). FHA 2-1: 2.625%, 3.625%, then 4.625% (5.404% APR) | Sign 10/05/26 to 10/11/26; close and fund by 11/20/26 | Select homes; Lennar Mortgage required for the offer; conventional version requires at least 20% down and a 740 score; APR "achieved by Lennar paid discount points" |
| Taylor Morrison, Verona at Lake Las Vegas | FHA 30-year fixed 4.875% (5.66% APR) | Contracts 10/2/26 to 11/1/26; close by 11/30/26 | Select quick move-in homes; rate from a pool of funds the builder "locked in" through its affiliated lender; seller pays up to $12,000 toward a temporary buydown fund, closing costs, prepaids or points; the buyer must also use the seller's closing agent |
| Toll Brothers, Nevada quick move-ins | Jumbo 5/1 ARM with 2-1: 4.75%, 5.75%, then 6.75% note for years 3–5 (7.39% APR) | Sign by 10/19/26; close by 11/20/26 | Loans $650,000 to $2,000,000; 20% down; 740 score; primary residence; adjusts yearly after year five, maximum 11.75% |
Lennar's offer is the clearest lesson in this market. Run it on the sales price Lennar's own disclaimer uses, $370,201, with 20% down: the loan is $296,161. The 2-1 layer pays $1,229 in year one and $1,393 in year two against a $1,567 note-rate payment, a subsidy of 12 × $338 + 12 × $174 = $6,144. The permanent part is bigger. At the 7.40% PMMS average the same loan would be $2,051 a month, so the 4.875% note is $484 a month lower for as long as you keep it. That comparison is only a benchmark, since PMMS is a national average and not your quote, but it shows where the value sits: in the note rate, not the two-year coupon.
Toll Brothers' offer shows the opposite risk. Using Toll's own payment factors per $1,000, a $1,000,000 loan pays $5,220 in year one, $5,840 in year two and $6,490 in years three to five; after that the rate resets yearly to an index plus a 3.25% margin, which Toll put at 7.75% fully indexed as of September 25, 2026 ($7,160 on Toll's factor) and capped at 11.75% ($10,090). Toll's factors apply to the amount financed, so later payments will differ somewhat as the balance falls. The temporary buydown sits on top of an adjustable loan, so month 61 matters more than month 25.
What Happens in Month 25 When the Buydown Runs Out?
Nothing is mailed to you and nothing is refinanced. The escrow simply reaches zero, and the servicer starts drafting the full note-rate payment. On the worked example, the payment goes from $2,246 in year one to $2,502 in year two, a $256 step, and then to $2,770 in month 25, another $268. From month one to month 25 that is $524 a month more, a 23.3% increase in principal and interest, and taxes, insurance and HOA dues sit on top of it.
Both rulebooks spell out who carries the risk if anything goes wrong with the escrow. HUD's handbook says that "if escrow payments are not received for any reason, the Borrower is responsible for making the total payment as described in the mortgage Note" (section II.A.6.a.ix), and Fannie Mae requires the buydown agreement to say the borrower "is not relieved of the obligation to make the mortgage payments required by the terms of the mortgage note if, for any reason, the buydown funds are not available."
The practical defense is to budget for the month-25 payment from the first day. One way to make that concrete is to set aside the escrow's help each month, $524 in year one and $268 in year two on this example, which by month 25 adds up to the same $9,504 cushion the builder funded. Whether that is the right use of the money depends on your other debts and savings, and it is a conversation for your own financial adviser, but the arithmetic is the point: the month-25 payment is the one you are agreeing to.
I know of no published Las Vegas figure for how many buyers refinance before month 25, so plan as if you will keep the loan. If rates do fall and you refinance early, the next section explains what happens to the money that is left.
What Happens to Leftover Buydown Money If You Sell or Refinance Early?
The May version of this post said that if you refinance in year one or two "the lender returns it to the builder, not to you." That is wrong for the loans most buyers use, and it is the correction I most want readers to see.
Under Fannie Mae's Selling Guide B2-1.4-04, if the mortgage is paid in full during the buydown period, the remaining funds "should be credited to the total amount required to pay off the mortgage, or they may be returned to either the borrower or the lender as specified in the buydown agreement." The lender option applies "if it funded the buydown." If the loan is foreclosed, the funds reduce the debt. If the home is sold and the buyer assumes the loan, the funds may continue to reduce the payments under the original plan.
FHA goes further. HUD's handbook says the escrow agreement must not "permit reversion of undistributed escrow funds to the provider if the Property is sold or the Mortgage is prepaid in full," nor "allow unexpended escrow funds to be provided to the Borrower in cash, unless the borrower funds were used to establish the escrow account" (section II.A.6.a.ix). The VA's page says the funds "cannot be used for any other purpose or returned to the party that funded the account," and must be "applied to the outstanding indebtedness if the loan is paid off in full, the property is foreclosed, or if a short sale or deed in lieu occurs."
So on a builder-funded buydown, refinancing early generally means the unused balance reduces what you owe at payoff rather than going back to the builder. The exact disposition is a term of your buydown agreement, which Fannie Mae requires to be in writing and in the loan's delivery file, so ask for a copy before closing and read the paragraph on early payoff. If it says anything other than what your program allows, ask your loan officer to explain it in writing.
How Do 1-0, 3-2-1 and Adjustable-Rate Buydowns Compare?
The 2-1 is the most common shape, but the same arithmetic covers the others. Fannie Mae caps any temporary buydown at a 3-point reduction, a three-year period and a 1-point step each year, so a 3-2-1 is the deepest structure a conventional lender can sell to Fannie Mae, and the Selling Guide treats it as a "significant" buydown. FHA bars temporary buydowns on adjustable-rate mortgages, and the VA's page lists fixed-rate VA loans as eligible.
Here are the main structures on the same $400,000 loan at the 7.40% note rate from Freddie Mac's October 8, 2026 survey, using the payments from the first table plus a 4.40% year-one payment of $2,003 for the 3-2-1.
| Structure | Year-one rate and relief | Later steps | Total subsidy | When the full payment starts |
|---|---|---|---|---|
| 1-0 | 6.40%, $268 a month | None | $268 × 12 = $3,216 | Month 13 |
| 2-1 | 5.40%, $524 a month | 6.40%, $268 a month | $6,288 + $3,216 = $9,504 | Month 25 |
| 3-2-1 | 4.40%, $767 a month | 5.40% ($524), then 6.40% ($268) | $9,204 + $6,288 + $3,216 = $18,708 | Month 37 |
The 3-2-1 costs about twice as much as the 2-1 because it adds a 3-point year, worth $9,204 by itself, in front of the same two steps. That eats into a contribution cap fast: on the 5%-down example from the cap table, a 3-2-1 on the $475,000 loan would cost $22,200, more than the entire $15,000 that a 3% cap allows. A 3-2-1 also leaves the biggest gap to the note-rate payment: $2,003 in year one against $2,770 in month 37, a $767 difference.
Adjustable-rate buydowns add a second step. Toll Brothers' Nevada jumbo offer layers a 2-1 on a 5/1 ARM, so the payment steps up in year two, steps up again in year three, and then can change every year after year five. Our post on Lennar's adjustable-rate financing in Cadence compares a fixed-period ARM against a 2-1 buydown side by side, and the same question applies to any of them: what is the rate in the first year you cannot predict?
How Should You Read and Negotiate a Builder Buydown Offer?
Treat the buydown as one line in a package, and negotiate the package. Across new-construction contracts in Las Vegas, Henderson and North Las Vegas, these are the steps I walk clients through, in order.
First, read the gates. Lennar's October offer spells them out: it applies "on select new homes in the greater Las Vegas area if buyer signs and delivers a purchase agreement between 10/05/26 and 10/11/26 and closes and fully funds on or before 11/20/26." That is a seven-day signing window, a close-by date that rules out a home not yet built, a limit to select homes, and a lender requirement. Lennar's disclaimer adds that the "offer requires financing through seller's affiliate Lennar Mortgage, LLC, but use of Lennar Mortgage, LLC is not required to purchase a home." That distinction comes from federal law: under RESPA's rules, an affiliated business arrangement is protected only if nobody "required" use of the affiliate (12 CFR 1024.15(b)(2)), and 12 CFR 1024.2 allows a package discount only if it is "optional to the purchaser," "a true discount below the prices that are otherwise generally available," and "not made up by higher costs elsewhere in the settlement process." You can buy with any lender; you give up the advertised financing if you do.
Second, get an outside Loan Estimate on the same loan amount, dated the same week, before you visit the sales office. It is the only way to know what the builder's financing is worth.
Third, ask for the offer three ways, in writing: the buydown as advertised, the same dollars as discount points, and the same dollars off the price. If the price-cut number is smaller, use the arithmetic above to see how long the smaller cut takes to win.
Fourth, check your contribution room. A buydown, a closing-cost credit and paid HOA dues all draw on the same 3%, 6% or 9% conventional cap, so on a 5%-down purchase the buydown can use most of it alone. If the build will outlast a standard lock, price the extended lock too; our explainer on how the 10-year Treasury moves mortgage rates helps you read daily moves without guessing at them.
Fifth, write it down. Whether you are touring Inspirada, Cadence, Skye Canyon or Lake Las Vegas, the incentive belongs in the purchase agreement or its addendum, with the dates, loan type, eligible home and dollar amount named; our guide to builder contract clauses worth negotiating shows where. Builder pages for Lennar, Toll Brothers, Taylor Morrison, Pulte and Del Webb, KB Home, D.R. Horton, Tri Pointe and Touchstone list their communities, and their offers change often, so read the offer page the day you tour. Our year-end builder incentives guide looks at how new-build concessions changed in past fourth quarters.
What Should You Ask the Builder's Lender Before You Sign?
A buydown is easy to describe and easy to misprice, so these are the questions I want answered in writing, on the lender's letterhead or Loan Estimate, before a client signs a purchase agreement that depends on one.
What is the note rate, and what are the year-one and year-two rates? Ask for all three, plus the month-25 principal and interest payment in dollars. That is the payment you are agreeing to, and it should match the note.
How much is the buydown escrow, and who funds it? The dollar amount should equal the monthly gaps times the months, as in the first table above. If it does not, ask why.
Is my rate coming from a temporary buydown, discount points, a forward commitment, or a combination? Fannie Mae counts an interested-party buydown or points against your concession cap but excludes a builder's pre-contract forward commitment, so the answer tells you how much room is left for closing costs.
What rate am I qualified at? Under Fannie Mae, FHA and VA rules the answer is the note rate or the full post-buydown payment. If the answer is anything else, ask which program the loan is.
What happens to unused escrow if I refinance or sell? Ask for the buydown agreement and read the early-payoff paragraph.
Does the APR on my Loan Estimate reflect the buydown? Under the CFPB's official commentary to Regulation Z, comment 17(c)(1)-3, a third-party buydown that is not part of the credit contract must not be reflected in the APR, while one written into the contract is disclosed as a composite rate. Because Fannie Mae requires the note to carry the permanent terms, ask which treatment your disclosures use before you compare APRs between lenders.
What is the price of the same loan without the buydown? This is Freddie Mac's 15-basis-point question in plain words.
Frequently Asked Questions
How does a 2-1 buydown work on a Las Vegas new construction home?
A builder or seller deposits money into an escrow account at closing. For the first 12 months, the escrow covers the gap between your payment at 2 points below the note rate and the full payment; for months 13 to 24 the gap is 1 point. From month 25 you pay the full note rate. On a $400,000 loan at 7.40%, Freddie Mac's average for October 8, 2026, you would pay $2,246, then $2,502, then $2,770, and the escrow would total $9,504. Your note always states the full rate.
Do I qualify for my mortgage at the buydown rate?
No. Fannie Mae's Selling Guide B2-1.4-04 requires lenders to qualify you on the note rate "without consideration of the bought-down rate." HUD's FHA handbook tells lenders to use the note rate for principal and interest, and the VA requires qualification on the full payment owed after the buydown ends, though its underwriters may treat the buydown as a compensating factor. In the worked example, underwriting uses the $2,770 payment, not the $2,246 year-one payment. A buydown improves your monthly budget for two years; it does not raise your approval amount.
Is a 2-1 buydown better than a price reduction on a new Las Vegas home?
On equal dollars, a price cut leaves you better off if you keep the loan. A $9,504 price cut on a $400,000 loan at 7.40% lowers the payment by about $66 a month forever and leaves you owing $9,318 less after two years, while the $9,504 buydown is spent by month 25. The buydown wins on early cash flow, $524 a month in year one, and it can stay ahead for years when the builder offers more dollars as a buydown than as a price cut. Ask for both numbers in writing.
How much can a builder contribute toward my buydown and closing costs?
It depends on the loan. Fannie Mae caps interested-party contributions at 3% of the lower of price or appraised value when your loan-to-value ratio is above 90%, 6% from 75.01% to 90%, 9% at 75% or less, and 2% on investment property, and the buydown counts inside that cap. FHA allows up to 6% of the sales price, including temporary buydowns. The VA counts a builder-funded buydown as a seller concession capped at 4% of reasonable value, but it does not limit seller credits for the loan's closing costs. Confirm your room before you write the offer.
What happens to unused buydown money if I refinance during the first two years?
For most buyers it does not go back to the builder. Fannie Mae says the remaining funds are credited to the payoff or returned to the borrower or the lender, if the lender funded the buydown, as the agreement specifies. HUD's FHA handbook forbids reversion to the provider when the loan is prepaid, and the VA requires remaining funds to be applied to the debt and never returned to the funder. Ask for your buydown agreement before closing and read its early-payoff paragraph so you know exactly where the balance goes.
Do I have to use the builder's lender to get the buydown?
To get the advertised financing incentive, usually yes; to buy the house, no. Lennar's October 2026 Las Vegas offer, for example, says it "requires financing through seller's affiliate Lennar Mortgage, LLC, but use of Lennar Mortgage, LLC is not required to purchase a home." Federal RESPA rules at 12 CFR 1024.2 and 1024.15 allow an affiliated-lender discount only if it is optional, a true discount and not made up by higher costs elsewhere. Get an outside Loan Estimate so you can see what the incentive is really worth.
Can a 2-1 buydown be used on an FHA or VA loan in Nevada?
Yes, on fixed-rate loans. HUD's FHA handbook bars temporary buydowns on adjustable-rate mortgages and refinances, requires an escrow for them, and counts builder-paid buydowns inside the 6% interested-party limit, so on FHA they fit fixed-rate purchase loans. The VA allows buydowns on all fixed-rate VA loans, including refinances, funded by the seller, lender, builder or veteran, with increases capped at 1% a year. Lennar's October 8, 2026 Las Vegas promotion, for example, advertised an FHA 2-1 at 2.625%, 3.625% and then 4.625%.
How is a 3-2-1 buydown different from a 2-1?
A 3-2-1 cuts the rate 3 points in year one, 2 in year two and 1 in year three, so the full payment starts in month 37 instead of month 25. On a $400,000 loan at a 7.40% note rate, the 3-2-1 subsidy is $18,708 against $9,504 for a 2-1, because it adds a 3-point first year worth $9,204, or $767 a month. Fannie Mae caps temporary buydowns at 3 points and three years and treats a 3-2-1 as a "significant" buydown, so it is the deepest structure a conventional lender can sell to Fannie Mae.
How Can Nevada Real Estate Group Help You Price a Builder Buydown?
Most of the money in a new-construction purchase is decided before you ever meet a loan officer: in which home you choose, which incentive you accept, and what the purchase agreement says about it. That is the part of the transaction a buyer's agent handles, and it is where the arithmetic in this guide earns its keep. When you bring us a builder's offer, we will lay the buydown, the same dollars as points and the same dollars off the price side by side on your actual loan amount and rate, check how much of your interested-party cap the package uses, match the offer's signing and close-by dates to the home you want, and get the terms into the contract in writing.
We are a brokerage, not a lender, so we will never quote you a rate or tell you where rates are going. Your loan officer gives you every binding number; our job is to make sure you are comparing the right numbers. If you are also weighing a resale home, our new construction versus resale comparison and our look at a $700,000 new build against a Summerlin resale show how the financing incentives stack up against the homes themselves. FHA buyers can start with our Las Vegas FHA guide, and first-time buyers can see the full process on our first-time buyer page.
I lead Nevada Real Estate Group, the #1 real estate team in Nevada with 150+ licensed agents and 9,061+ verified five-star reviews, and you can read more about the team on our about page. For a buydown comparison on a specific home in Las Vegas new construction, call our Las Vegas office at (702) 637-1759, email info@nevadagroup.com, or send us a message. Our office is at 8945 W Russell Rd, Suite 170, Las Vegas, NV 89148. Nevada Real Estate Group is brokered by LPT Realty, and my Nevada license is S.181401.
Which Sources Inform This 2-1 Buydown Guide?
Payments are principal and interest on 30-year loans at the stated rates, rounded to the dollar, and are illustrations, not quotes. Agency rules and builder offers were read on October 8, 2026; builder offers change often.
- Freddie Mac Primary Mortgage Market Survey: 30-year fixed average of 7.40% as of October 8, 2026, published weekly on Thursdays.
- Freddie Mac research, July 31, 2023: 2-1 share, the 15-basis-point finding, lender concentration and note-rate qualification.
- Fannie Mae Selling Guide B2-1.4-04, Temporary Interest Rate Buydowns: eligibility, 3-point and three-year limits, custodial funds, qualification and disposal of funds at payoff.
- Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions: 3%, 6%, 9% and 2% caps, buydown inclusion and the forward-commitment exclusion.
- HUD Single Family Housing Policy Handbook 4000.1: FHA note-rate qualification, 6% interested-party limit, buydown escrow rules and the ARM and refinance exclusions (version issued August 12, 2026).
- U.S. Department of Veterans Affairs, Temporary Buydowns: eligible loans, funders, the 4% concession cap, escrow handling and qualification.
- U.S. Department of Veterans Affairs, VA funding fee and loan closing costs: no limit on seller credits for a loan's closing costs, separate from the 4% concession cap.
- CFPB, Mortgage financing options in a higher interest rate environment: the consumer trade-off of a temporary buydown (December 21, 2022).
- CFPB, How should I use lender credits and points: what a point is and why the rate reduction varies.
- CFPB, Official interpretation of Regulation Z section 1026.17: comment 17(c)(1)-3 on third-party buydowns and the APR.
- 12 CFR 1024.2, RESPA definitions and 12 CFR 1024.15, affiliated business arrangements: the "required use" rules behind affiliated-lender incentives.
- FHFA, Conforming Loan Limit Values for 2026: the $832,750 baseline limit (November 25, 2025), with the 2026 county list showing $832,750 for Clark County.
- Nevada Revised Statutes Chapter 361, section 361.227: how Nevada determines taxable value.
- Lennar Fall Super Sale, Las Vegas: the builder's advertised offer, read October 8, 2026.
- Taylor Morrison, Las Vegas: the builder's advertised Verona at Lake Las Vegas offer, read October 8, 2026.
- Toll Brothers, Nevada: the builder's advertised jumbo 2-1 ARM offer, read October 8, 2026.
