Trying to decide if you should cut the price on your Lincoln home or offer a rate buydown instead? You are not alone. With mortgage rates higher than recent years, buyers feel every dollar in their monthly payment, and sellers are looking for the most efficient incentive. In this guide, you will see how price cuts stack up against temporary and permanent buydowns, with Lincoln-scale numbers and the lender rules that matter. Let’s dive in.
Why it matters in Lincoln
Home prices in Lincoln sit in the mid to high six figures. For example, one market snapshot showed a median list price around $770,000 in June 2025, which helps explain why small rate moves can change monthly costs a lot for buyers. You should confirm the most current figure with the local MLS, but this gives helpful scale for decisions you make today. Mortgage rates also shape buyer demand. The average 30-year fixed rate was about 6.3% in early October 2025, according to the weekly survey from Freddie Mac, which is why incentives that reduce payments are getting attention.
For local price context, see Rocket’s overview of Lincoln’s market snapshot.
Price cut basics
A price cut is a permanent drop in your list and sales price. It lowers the buyer’s loan amount and monthly payment for the life of the loan. Price cuts are simple and very visible to every shopper. Appraisers and underwriters treat it as the new price, and it can influence comparable sales over time.
Rate buydown basics
A rate buydown uses seller funds to reduce the buyer’s interest rate. There are two main types:
- Temporary buydown. A common 2-1 buydown lowers the payment for the first two years, then the loan returns to the original note rate. Funds are placed in a custodial account and applied each month, per Fannie Mae’s buydown guidance.
- Permanent buydown. Paying discount points at closing lowers the interest rate for the full term. A common rule of thumb is 1 point equals about a 0.25% rate reduction, but pricing varies by lender, as explained in this points overview.
Important lender rule: most lenders qualify the borrower at the note rate, not the reduced buydown rate. A temporary buydown improves near-term cash flow but usually does not help a buyer qualify if they do not already meet ratios at the full note rate. See Fannie Mae’s underwriting rule for details.
Lincoln example: $700,000 scenario
To keep this concrete, here is a simple comparison using a price point common in Lincoln.
- Price: $700,000
- Down payment: 20% ($140,000)
- Loan amount: $560,000
- 30-year fixed note rate: 6.3% (Freddie Mac PMMS)
- Baseline monthly principal and interest: about $3,466
2-1 temporary buydown
- Year 1 rate: 4.3%. Payment about $2,771.
- Year 2 rate: 5.3%. Payment about $3,110.
- Years 3 and beyond: back to 6.3%. Payment about $3,466.
- Estimated seller cost at closing: about $12,620 to fund the payment subsidy for the first two years. The lender escrows this amount and applies it monthly per Fannie Mae guidelines.
What the buyer feels: a large monthly payment drop in the first two years, then a step up to the full note rate.
Same dollars as a price cut
- If you cut price by the same $12,600, the new price is about $687,400.
- With 20% down, the new loan is about $547,400.
- Monthly payment at 6.3% is about $3,388, which saves roughly $78 per month compared to no incentive.
What the buyer feels: a small but permanent payment reduction and a slightly smaller loan balance.
Permanent points paid by seller
- If you cover about 2 points on a $560,000 loan, that is roughly $11,200.
- If pricing yields about a 0.5% rate reduction, the rate might fall from 6.3% to about 5.8%.
- Monthly payment would be about $3,286, saving around $180 per month.
- Breakeven time for those points is about 62 months, based on the upfront cost divided by the monthly savings. See the points primer for how lenders price points.
Which move wins when
Choose a temporary buydown if your goal is to keep list price firm while giving buyers meaningful near-term payment relief. It is also a strong marketing hook in a rate-sensitive environment. Just confirm the buyer still qualifies at the note rate.
Choose a price reduction if the buyer cannot qualify at today’s note rate and only a lower loan amount will work. Price cuts are highly visible in search filters and can prompt faster traffic.
Choose permanent points if you want to lower the payment for the life of the loan and the buyer expects to keep the mortgage long enough to reach breakeven.
Rules that can trip you up
- Buyer qualification. Lenders generally underwrite at the note rate, not the bought-down rate. See Fannie Mae’s buydown rule.
- Seller contribution caps. When a seller funds a buydown or points, it counts toward Interested Party Contributions. Caps vary by loan-to-value and program. Review the ranges and confirm the buyer’s loan program with the lender using Fannie Mae’s IPC guidance.
- Appraisal and comps. Financing concessions must be disclosed. Appraisers may adjust comps when concessions are present. See Fannie Mae’s comparable sales adjustments.
- Program differences. FHA, VA, USDA and conventional loans have different caps and mechanics. Confirm details with the buyer’s lender before advertising an incentive.
Marketing your incentive in Lincoln
A price cut is obvious in every portal and MLS search. A buydown is not always visible unless you call it out. Use clear MLS remarks, for example: “Seller to contribute $X toward a temporary rate buydown. Contact agent and lender for details.” Avoid implying that buyers can qualify at a lower rate than the note rate. Keep a simple one-page payment example ready for showings so buyers see the monthly impact.
Quick prep checklist
- Coordinate with a lender to estimate the exact buydown subsidy or point cost and how it will be documented in the buydown agreement.
- Verify seller contribution caps for the buyer’s loan program and LTV.
- Prepare MLS and marketing copy that clearly states the incentive and who pays what at closing.
- Disclose concessions to the appraiser and lender in the contract and closing documents.
- Remind both parties to speak with a tax advisor. IRS Publication 530 covers how points are treated and when seller-paid points may be deductible for the buyer. Review IRS Pub. 530 for the general rules.
Bottom line for Lincoln sellers
If you need fast visibility and a simple message, a targeted price cut works. If you want to keep your list price and deliver the biggest short-term payment relief, a well-structured 2-1 buydown is usually more efficient than spending the same dollars on a small price cut. If the buyer plans to hold the loan long enough, seller-paid points can create lasting savings with a clear breakeven. If you want a side-by-side estimate for your address using current rates and your timing, connect with Marco Esquivel for a calm, numbers-first plan.
FAQs
What is a 2-1 buydown on a Lincoln home sale?
- A 2-1 buydown uses seller funds to reduce the buyer’s payment for the first two years, then the loan returns to the original note rate. Funds are escrowed and applied monthly per Fannie Mae guidance.
Do buydowns help a buyer qualify for the mortgage?
- Usually no. Lenders generally qualify at the full note rate, not the temporary buydown rate, so the buyer must meet ratios at the higher payment per Fannie Mae rules.
How much can a Lincoln seller contribute toward a buydown?
- Seller-paid buydowns and points count toward Interested Party Contributions, which have caps that vary by LTV and program. Typical conventional ranges are about 3%, 6% or 9% depending on LTV. Confirm the buyer’s loan program and limits using Fannie Mae’s IPC guide.
Are seller-paid points tax deductible for the buyer in California?
- Points are generally prepaid mortgage interest. If IRS conditions are met, the buyer may be able to deduct points in the year paid and treat seller-paid points as if the buyer paid them. See IRS Publication 530 and consult a tax advisor.
Which attracts more buyers in Lincoln, a price cut or a buydown?
- Price cuts show up immediately in search filters, which can drive quick traffic. A buydown can be just as compelling if you market the monthly savings clearly in the MLS and at showings, especially when rates are elevated as shown in the Freddie Mac survey.
