$10K Price Drop vs Rate Buydown: Which Wins?

When you’re house hunting, every dollar counts—and sometimes, you get to choose how to make your money work harder. If you’re buying an $800,000 home with 20% down, is it better to take $10,000 off the purchase price, or use a $10,000 concession to buy down your mortgage rate? Both sound great (and in some scenarios buyers are negotiating both in our current 2025 buyer's market), but which one truly benefits you the most?

Let’s Break Down the Scenarios

• Option 1: $10,000 Off the Price
• Sale price drops to $790,000. Your down payment lowers to $158,000, and your monthly payment (at a 6.625% interest rate) is $4,047. You save $2,000 upfront and about $51 per month on your payment.

• Option 2: $10,000 for a Rate Buydown
  Keep the $800,000 price, but use that $10K to buy down your interest rate to 6.25%. Your monthly payment drops to $3,941, saving you $157 per month. That’s nearly triple the monthly savings compared to the price drop!

Which Option Wins?

In the short term, the price drop gives you a little breathing room up front—your down payment and monthly costs are slightly lower. But over time, the lower interest rate from the buydown usually wins out, putting more money back in your pocket every single month.

Of course, if mortgage rates drop significantly in the future and you refinance, the math changes. But if you plan to stay put for a while, the rate buydown is often the smarter play.

Thinking about making a move or have questions about your best options? Let’s chat! I’m here to help you make sense of the numbers and find the strategy that fits your life best.