A seller credit is money the seller contributes at closing, usually toward your closing costs or a mortgage rate buydown. A rate buydown then uses part of that money — or your own — to lower your interest rate, either temporarily for the first year or two or permanently for the life of the loan. With Freddie Mac's 30-year average sitting at 7.03% the week of September 24, 2026, and more Eastside sellers willing to negotiate than a year or two ago, both tools are worth understanding before you write an offer. Here's how each works, how much a seller is allowed to contribute, and how to figure out which one actually saves you the most.
Seller credit vs. rate buydown vs. price reduction
These three get used loosely and interchangeably, but they do different things:
- A price reduction lowers the purchase price itself, which lowers your loan amount and the down payment dollars you need proportionally.
- A seller credit is a lump sum the seller pays toward your closing costs at settlement. It doesn't change the purchase price on paper, but it reduces the cash you need to bring to the table.
- A rate buydown is a specific use of cash — seller credit, your own funds, or a mix — to lower your interest rate rather than your cash-to-close. It can be temporary (lower payments in the early years, then the note rate kicks in) or permanent (a lower rate for all 30 years).
A seller credit can fund a buydown, pay other closing costs, or both — it's the source of funds, not the mechanism.
How a permanent buydown works
A permanent buydown means paying upfront for discount points — each point costs 1% of your loan amount and typically knocks roughly a quarter of a percentage point off your rate, though the exact reduction varies by lender and by the day's pricing. On a $720,000 loan at a 7% note rate, one point costs about $7,200 and might bring the rate down to around 6.75%, saving roughly $120 a month. At that pace, it would take about five years of payments to recover the upfront cost — worth it if you plan to keep the loan that long, less so if you expect to sell or refinance sooner. (These are illustrative, rounded figures; ask your loan officer for the exact point cost and rate reduction on your file.)
How a temporary buydown (2-1) works
A 2-1 buydown lowers your rate by 2 percentage points in year one and 1 point in year two, then reverts to the full note rate for the remaining term. The discount is funded upfront into an escrow account, and the loan servicer draws from it each month to cover the difference between your reduced payment and the full one — your rate on paper never changes, and the trick is purely in how the payment is subsidized in the early years. On that same $720,000 loan at 7%, funding a 2-1 buydown (5% effective in year one, 6% in year two) costs roughly $16,000-$17,000, or a little over 2% of the loan amount — again illustrative, since actual escrow funding is quoted at rate lock. A 1-0 buydown (one discounted year) or 3-2-1 buydown (three discounted years) work the same way with a shorter or longer runway.
The key question for a temporary buydown is who's paying. If a seller or builder funds it as part of the deal, you get genuinely lower payments in the early years for free. If you'd be funding it yourself, you're really just prepaying part of your own interest — worth doing only if you're confident your income will rise or you'll refinance before the full rate kicks in.
How much sellers are actually allowed to contribute
Every loan type caps how much a seller (or other "interested party" like a builder or listing agent) can contribute, based on a percentage of the purchase price or appraised value, whichever is lower:
- Conventional loans (Fannie Mae/Freddie Mac): on a primary residence or second home, 3% if your down payment is under 10% (loan-to-value over 90%), 6% if your down payment is 10-25% (LTV 75.01-90%), and 9% if you're putting down more than 25% (LTV 75% or less). Investment properties are capped at 2% regardless of down payment.
- FHA loans: capped at 6% of the sale price or appraised value, whichever is lower.
- VA loans: seller-paid closing costs and discount points aren't capped, but true "concessions" — anything beyond normal closing costs, including cash toward a temporary buydown — are capped at 4% of the property's value.
Contributions above these caps count as a sales concession, and the lender will reduce the value used to calculate your loan-to-value ratio by the excess — so more isn't always better once you're past the limit. Your loan officer will tell you the exact cap on your specific file before you negotiate.
Why more Eastside sellers are offering credits right now
For most of 2024-2025, well-priced Eastside listings drew multiple offers and little room to ask for concessions. That's shifted in 2026: NWMLS reporting from earlier this year showed Eastside active listings and months of supply both up meaningfully year over year, and several 2026 market reports describe the region as the most balanced it's been in years, with condos in the roughly $500K-$800K range shifting toward buyer-favored conditions. That doesn't mean every seller will negotiate — a well-priced home in a strong school district can still draw competition — but it does mean asking for a credit toward a buydown or closing costs is a realistic, common request on many Eastside listings today in a way it wasn't 18 months ago.
How to ask for one
A seller credit or buydown request is typically written into your offer as a dollar amount or percentage on the financing terms of your purchase and sale agreement, rather than negotiated verbally after the fact. A few practical notes:
- Decide the ask before you write the offer. Your lender can tell you what a given credit amount buys in rate reduction, so you're negotiating a specific number, not a vague concept.
- Frame it as part of your overall offer, not a separate demand after acceptance. In a competitive situation, a request for a large credit alongside a below-ask price can make an offer less attractive than a clean one at a fair price.
- Know your loan type's cap before you ask, so you don't request more than your loan program allows.
- Revisit it after inspection if you didn't ask upfront — a credit toward closing costs or a buydown is often easier for a seller to agree to than a price reduction once you're already under contract.
Which one actually saves you more?
There's no single right answer — it depends on your down payment, your loan type's cap, and how long you'll keep the loan:
- If you're short on cash to close, a straight credit toward closing costs stretches your available cash furthest.
- If you plan to hold the loan long-term and rates aren't likely to fall much further, a permanent buydown usually wins over years two through thirty.
- If you expect to refinance within a couple of years — say you're betting rates will drop — a temporary buydown funded by the seller captures savings now without paying for a permanent rate cut you might not keep.
- If the seller's credit is smaller than what a full buydown costs, splitting it between a partial buydown and closing costs is often more useful than putting it all toward a rate reduction too small to notice.
Run the actual numbers with your loan officer before deciding — the math depends on your exact rate, loan amount, and how long you expect to keep the loan.
Where this fits in your buying process
A seller credit or buydown request only works if you already know your budget and are pre-approved with a lender who can quote you real numbers — see our guide to mortgage pre-approval in Washington. It's also one of several ways to reduce what you pay at the table, alongside the strategies in our closing costs guide. And if you're negotiating one on a competitive listing, pair it with the tactics in how to win a bidding war on the Eastside so you're not trading a credit for a weaker offer overall. New to the process end to end? Start with our first-time buyer guide for King County & the Eastside.
A flat fee agent who helps you negotiate the whole offer
Whether you're buying in Redmond, Bellevue, or Kirkland, a seller credit is just one lever in the negotiation — price, contingencies, timeline, and repairs all move together. A traditional buyer's agent charging roughly 2.5% commission on an $850,000 Eastside home costs about $21,250. A flat $2,999 buyer service provides the same core representation — offer strategy, negotiation, contract review, and closing support — while leaving significantly more of your budget for the down payment, closing costs, or a buydown of your own. See flat fee vs. a traditional buyer's agent for the full comparison.
General information, not financial or legal advice. Mortgage interest rates, discount point pricing, seller-contribution limits, and lender and investor guidelines change over time and vary by lender and loan program — confirm current rates, point costs, and contribution limits directly with your loan officer before making financial decisions. Shi Hao Liu is a licensed WA real estate broker (License #26003789) with Kelly Right Real Estate, not a mortgage lender. Verify any WA broker at the WA Department of Licensing.