Buyer Guides
Builder Rate Buy-Downs vs. Buying Resale: What Indianapolis Buyers Should Know
A builder rate buy-down can lower your monthly payment a lot, but compare three things before choosing it over a resale home: what the rate does after the first few years, whether you must use the builder's lender, and the total price you pay. A permanent fixed-rate buy-down is usually the strongest offer; a temporary buy-down or adjustable-rate loan only helps if you plan to sell or refinance before it resets.
By Zach Archer, Independent Broker · · 7 min read
Why builders are offering low rates right now
With mortgage rates near 7% in fall 2026, national builders around Indianapolis — Pulte, D.R. Horton, Lennar, Taylor Morrison, M/I Homes and others — are using their in-house lenders to advertise rates that start with a 4 or 5. Builders would rather spend money lowering your rate than cutting the sticker price, because a lower price resets the comparable sales for every other home in the neighborhood.
The three kinds of builder rate offers
The headline rate looks similar across builders. The fine print is not.
- Permanent (fixed) buy-down: the lower rate lasts the full 30 years. Usually the best value.
- Temporary buy-down (often called 2-1): the rate is lower for the first one or two years, then goes back to the note rate. Your payment rises in year three.
- Adjustable-rate (ARM) promotion: for example, a 7/6 ARM fixed for seven years that then adjusts every six months. Good if you expect to move or refinance; risky if you plan to stay.
Questions to ask before you sign
- What is my rate and payment in year three, and in year eight?
- Do I have to use the builder's lender to get this incentive? What happens if I use my own?
- When must the loan be locked and closed? Many promotions apply only to quick move-in homes with a firm closing deadline.
- Is the incentive coming out of a price reduction I could take instead?
- What credit score was the advertised rate based on? Many examples assume 740–780+.
When a resale home is still the better deal
Resale homes in Hendricks County often come with things a new build charges extra for — finished landscaping, window treatments, fences, mature trees and an established neighborhood. In fall, resale sellers are also more willing to pay closing costs or fund a rate buy-down themselves, which can close much of the gap.
The fair comparison is total monthly cost and total cash to close, side by side. We do that comparison for buyers all the time, and our recommended lender, Chris Kerr at Elements Financial, can price your own loan against the builder's offer so you know whether the incentive is real.
Do you need your own agent for new construction?
Yes. The salesperson in the model home works for the builder. In most cases the builder pays your agent's commission, and your agent can review the contract, the lender terms and the inspection timeline for you. Many builders require your agent to be with you on your first visit, so bring us along from the start.