Are You Worried You Can’t Afford Today’s 7% Mortgage Rates? Here’s a Smart Way to Ease Into Your Home Purchase
Buying a home when mortgage rates hover around 7% can feel daunting. You’ve found “the one,” but wondering if your budget can handle the monthly payment is natural. That’s where our Seller Payment Subsidy Program comes in—a powerful tool to help you transition into homeownership while maximizing your buying power.
What Is the Seller Payment Subsidy Program?
Instead of a traditional rate buydown, this program lets the seller contribute credits toward temporarily lowering your interest rate for the first three years of your loan. Think of it as a way to “step into” your 7% mortgage:
- Year 1: Your rate could be as low as 3.75%,
- Year 2: Adjusts to 4.75%,
- Year 3: Then to 5.5%,
- Years 4–30: You remain locked at 7% for the rest of your 30-year fixed mortgage.
This staggered approach means your initial payments are hundreds of dollars lower than they would be at today’s 7% note rate.
Why Use a Seller Payment Subsidy?
- Afford More Home Today
With lower payments in those crucial entry years, you’ll qualify for a larger loan amount—so you can compete for the best homes in your market. - Smooth Transition from Renting to Owning
The financial leap from rent to mortgage is easier when your early payments are reduced. Give yourself time to adjust your budget. - Build Equity Faster
Every dollar you save in interest early on can be redirected toward additional principal payments or other investments. - Stronger Offer in Competitive Markets
Sellers don’t lose by offering subsidy credits rather than cutting their price. It’s often more appealing than asking for a straightforward price reduction.
How Much Does It Cost?
The cost of the subsidy equals the total savings you receive over the first three years:
- Estimate Your Payments
- Calculate your monthly payment at 7%,
- Then at 3.75%, 4.75%, and 5.5%.
- Total the Savings
Subtract each subsidized payment from the “sticker” 7% payment over the first 36 months, then add those differences—it’s that simple. - Request Seller Credit
You ask the seller to cover that dollar amount as a credit at closing. Those funds go into your escrow account and automatically reduce your payments each year.
Pro Tip: Use our mortgage calculator or get a pre-approval from one of our advisors to see exact figures tailored to your purchase price and down payment.
The Process in Three Steps
- Get Pre-Approved
Lock in today’s 7% rate with one of our mortgage advisors and determine your payment at 3.75%, 4.75%, and 5.5%. - Negotiate with the Seller
Ask for the subsidy credit equal to your calculated savings. In a buyer’s market, sellers often use credits to stand out. Even in a tight market, motivated sellers will consider it. - Close & Save
At closing, the agreed-upon funds are applied to your loan—automatically lowering your monthly payment each of the first three years.
What Happens After Year 3?
Once the subsidy funds are exhausted, your interest rate resets to your original 7% note rate. That rate is guaranteed—it won’t rise or fall with the market, so you can plan your long-term budget with confidence.
And here’s the best part: when market rates eventually drop below 7%, you can refinance to lock in a permanently lower rate—further reducing your payment and overall interest expense. It’s the ultimate way to turn today’s high starting rate into a short-term stepping-stone toward long-term savings.
Is the Seller Payment Subsidy Right for You?
This strategy can be especially valuable if:
- You’re a first-time homebuyer stretching to compete in today’s market.
- You want a smoother cash-flow transition from renting to owning.
- You’d rather negotiate credits than a price reduction—often more appealing to sellers.
To decide if this makes sense for your unique situation—factoring in your income, local market dynamics, and long-term goals—talk with one of our mortgage experts.
Next Steps: Maximize Your Buying Power Today
- Fill Out the Form Below
Request a Mortgage Discovery Consultation to run a side-by-side comparison of your payment options. - Explore Loan Scenarios
We’ll show you exactly how much you save each year under the Seller Payment Subsidy Program versus a straight 7% mortgage. - Plan Your Refinance
If rates dip in the future, you’ll be perfectly positioned to refinance into a lower rate—supercharging your savings.
Let’s turn today’s 7% rates into an opportunity to own the home you deserve!
