M/I Homes is advertising a 3.875% first-year rate on select move-in-ready homes in Apex and Raleigh. Under the program's own fine print, though, the buyer's lender qualifies them on a 5.875% payment. That gap is how every temporary rate buydown works. Fannie Mae requires borrowers to qualify at the note rate, and it does not allow the lender to use the reduced rate. M/I's disclosure lays out the payments on a $460,000 home with 20% down and a $368,000 loan. Principal and interest run $1,730 in year one, $1,947 in year two, and $2,176 in years three through 30. Approval is based on the $2,176 payment.
That detail explains a lot about the new-versus-resale decision in Wake County this fall. Builder incentives look like something only a builder can offer. They are actually seller concessions, and the same federal caps apply to a homeowner selling a 15-year-old house in North Raleigh. The difference lies in who is willing to spend the money and how fast they want to close.
Two years of lower payments, one qualifying payment
Here's what the M/I 2/1 buydown looks like when you lay out the payments by year, using the builder's own example.
| Loan year | Rate | Monthly principal and interest |
|---|---|---|
| Year 1 | 3.875% | $1,730 |
| Year 2 | 4.875% | $1,947 |
| Years 3 through 30 | 5.875% | $2,176 |
The early savings are real money in the buyer's pocket. They do not change the loan amount a buyer qualifies for, because underwriting looks at the year-three payment. Freddie Mac's guide also requires qualifying at the note rate. It defines a "Limited Buydown" as no more than 2 points below the note rate for no more than two years. VA guidance likewise requires qualifying on the full payment due after the buydown ends. Fannie Mae caps a temporary buydown at 3 percentage points below the note rate, and the rate the borrower pays can rise by no more than 1 point a year.
The more meaningful number in M/I's offer is the 5.875% note rate. The same disclosure compares it with a market rate of 7% as of September 22, 2026, which carried a $2,448 payment on the same loan. So the permanent rate is about a point below market, and the first two years sit lower still. The program covers Friendship Station, Retreat at Friendship and Retreat at Friendship Townhomes in Apex, plus Southall Station in Raleigh.
Why the gap widened in late September
These offers matter more now because the market rate moved fast. Freddie Mac's 30-year average was 6.95% on September 17, 7.03% on September 24, and 7.28% on October 1, 2026, according to its weekly survey archive. WRAL's report on the October 1 reading called it the highest level since November 22, 2023. The report estimated that the roughly one-point rise since February adds about $276 a month on a $400,000 loan. The Mortgage Bankers Association's October 7 release put the conforming 30-year contract rate at 7.49% for the week ending October 2, with 0.84 points. MBA economist Joel Kan said higher rates had caused many potential borrowers to step back from the purchase market.
This summer the picture was different. Doorify MLS reported in mid-August that the 30-year fixed had held between 5.8% and 6.1% since February. A sub-4% builder rate looked like a perk against a 6% market. Against a market above 7%, the same rate is a much bigger draw.
Wendell Falls shows how builders are using that gap right now. The community's offers page lists Brookfield Residential rates as low as 3.99% fixed on select quick move-in townhomes, cottage homes and single-family homes that close by October 31, 2026. Homes by Dickerson offers a 30-year fixed buydown to 1% below the weekly average rate on inventory homes, which requires using its preferred lender and attorney. Garman Homes is offering personalized incentives on quick move-ins and final opportunities. A McNeill Burbank offer of up to $30,000 still appears on the page, but it applied to contracts accepted by September 30.
The same caps apply to every seller
When the money comes from a seller, builder or agent, the agencies call it an interested party contribution. Every program caps those contributions, and buydown costs count toward the cap.
| Loan type | Seller contribution cap | Do buydowns count toward it? |
|---|---|---|
| Conventional, Fannie Mae, primary residence | 3% above 90% LTV, 6% from 75.01% to 90%, 9% at 75% or below | Yes, both temporary and permanent |
| Conventional, Freddie Mac | 3% above 90%, 6% above 75% through 90%, 9% at or below 75% | Buydown cost is documented within the contribution calculation |
| FHA | 6% of sales price | Yes, permanent and temporary |
| VA | 4% of reasonable value for concessions | Seller- or builder-funded temporary buydowns count as concessions |
The sources for each row are the Fannie Mae Selling Guide, the Freddie Mac Guide, HUD Handbook 4000.1 and the VA's closing cost and temporary buydown pages. Fannie Mae calculates the percentage on the lower of the sale price or the appraised value. Seller money cannot cover the down payment, required reserves or the borrower's minimum contribution. The VA treats discount points as a negotiable closing cost, separate from its 4% concession limit.
Here's what that means at a typical Wake County price. The Wake County Register of Deeds reported a median of $440,000 for August 2026, down from $458,500 in July. Take a conventional buyer putting 10% down on a $440,000 home. That loan falls in the 6% tier, so a seller could contribute up to $26,400 toward closing costs and buydowns. A builder faces the same ceiling. One caveat on that median: it comes from deed records, not MLS closings. The county also changed its method this fiscal year to include transactions with low or zero excise values, which restated June's median from $475,000 to $443,000.
What a resale seller's version costs
The cap tells you how much a resale seller may contribute. It doesn't tell you what that money buys. According to the Consumer Financial Protection Bureau, one discount point costs 1% of the loan amount, but there's no fixed rate cut that comes with it. In the CFPB's example, $4,000 on a $400,000 loan might lower the rate by 0.25 percentage points, and a different lender could offer more or less for the same point.
That variability is the builder's structural advantage. M/I's offer runs through its own lender, M/I Financial. Homes by Dickerson's buydown requires its preferred lender. A homeowner selling one house buys a rate reduction at whatever price the buyer's lender quotes that week. A builder with a lending arm and dozens of standing homes can package the same concession dollars into a headline rate.
The three ways a resale seller can spend that money also produce very different results. U.S. News ran a May 2026 illustration on a $500,000 home that shows the spread:
- A $25,000 price reduction: monthly principal and interest of $2,402, with $484,669 in lifetime interest.
- A $12,000, three-point permanent buydown: $2,334 a month, with $440,345 in lifetime interest.
- A $9,104 2-1 temporary buydown: $2,027, then $2,271, then $2,528 a month, with $501,074 in lifetime interest.
In that example the permanent buydown cost the seller less than half as much as the price cut and saved the buyer more in interest. The temporary buydown cost the least and gave the lowest first-year payment, but it produced the highest lifetime interest of the three. All three use concession dollars. The structure decides who benefits, and when.
How appraisals handle concessions
Concessions also show up in appraisals, which link the builder's offer to the value of the resale house down the street. Freddie Mac's guidance for appraisers says comparable sales should be adjusted for concessions based on the market's reaction, not dollar for dollar. The effect on sale price "may be something equal to, less than or greater than the amount of the concessions." The same guidance says concessions are common "in new subdivisions where builders often offer concessions or buydowns to drive interest and support higher prices."
A subsidized rate can support a higher price on a new home, and that sale may later be used as a comparable. Whether an appraiser adjusts it downward, and by how much, depends on the appraiser's read of the market. That uncertainty affects both the buyer of the new home and the resale seller whose house is appraised against it. Fannie Mae adds a related rule. Contributions above the borrower's actual closing costs, or above the percentage cap, count as sales concessions and reduce the price used to calculate the loan-to-value ratio.
The real constraint is the calendar
If the caps are the same, what separates a builder's offer from a resale seller's is the conditions attached. M/I's closing-cost help applies to contracts signed between September 22 and October 11, 2026 that close by December 18. The buyer has to apply for the loan within 48 hours of signing, have a minimum credit score of 720, and occupy the home as a primary residence. Brookfield's 3.99% rate depends on closing by October 31. These deadlines are built to move standing inventory before year end, and they move faster than a typical resale negotiation.
Not every buyer is chasing the lowest rate. In a September 29 Triangle Business Journal report, TowneBank Mortgage's Trent Olson said some local move-up buyers were going ahead despite higher rates because changes in family, work or housing needs outweighed keeping a low-rate mortgage. Those buyers are comparing a builder's packaged rate with whatever a resale seller is willing to put on the table, and the federal rules for both offers are the same.
Quick answers
Does a 2/1 buydown help a buyer qualify for a larger loan? No. Fannie Mae, Freddie Mac and the VA all require qualifying at the note rate or the full post-buydown payment, so the lower early payments don't increase the qualifying amount.
Can a resale seller in Wake County pay for a buyer's rate buydown? Yes, within the program limits. Fannie Mae, HUD and the VA each name buydowns as contributions that count toward their caps.
Are the Wendell Falls and M/I offers still available? Builder offers carry their own deadlines and can change without notice. As of early October 2026, Brookfield's offer required closing by October 31, and the McNeill Burbank deadline had already passed.
If you're weighing a builder's buydown against a resale home, or planning how to price and structure concessions on a Raleigh-area listing this fall, Local to Coastal Realty can help you compare the actual payment and qualifying numbers for both options before any deadline forces a decision. Request a Free Consultation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
