Buydown, Seller Credit or Points? How North Texas Buyers Can Lower a Mortgage Payment at 7.40%

by Rise Realty

By Rise Realty Texas · Reviewed by Kelly Bishop, Broker
Published October 22, 2026

North Texas buyers usually get the biggest monthly savings from three moves: a seller- or builder-funded rate buydown, discount points when they plan to keep the loan for years, and claiming every property tax exemption they qualify for. In Collin and Grayson counties, taxes and insurance can make up a large part of the escrow payment, so that side deserves as much attention as the rate.

Here is the backdrop. Freddie Mac's weekly survey put the average 30-year fixed rate at 7.40% on October 15, 2026, unchanged from the prior week and well above the 6.27% average a year earlier. The median listing price in September 2026 was $517,500 in Collin County and $344,450 in Grayson County, according to Realtor.com data published through FRED. With rates and prices where they are, buyers in McKinney, Anna, Celina, Van Alstyne, Sherman and Denison are asking how buydowns work. This guide explains each option in plain terms.

Row of single-family homes along a residential street — Single-family homes along a residential street.

Where rates and prices stand in North Texas
Measure	Latest figure	As of
30-year fixed rate, national average	7.40%	Week of October 15, 2026
30-year fixed rate, one year earlier	6.27%	October 2025
15-year fixed rate, national average	6.71%	Week of October 15, 2026
Median listing price, Collin County	$517,500	September 2026
Median listing price, Grayson County	$344,450	September 2026

Sources: Freddie Mac Primary Mortgage Market Survey (October 15, 2026); Realtor.com Housing Inventory median listing price, retrieved via FRED (series MEDLISPRI48085 and MEDLISPRI48181). Rates are national averages, not offers.

What actually lowers a monthly mortgage payment in North Texas?

Your payment has four parts: principal, interest, property taxes and homeowners insurance, plus mortgage insurance on some loans. You can lower it by reducing the rate, reducing the balance, or reducing what goes into escrow. Here is how the common tools compare.

Payment-lowering options for North Texas buyers and owners
Tool	What it changes	Savings last	Often considered when
Discount points	Lowers the note rate in exchange for an upfront fee	As long as you keep the loan	You expect to keep the loan for many years
Temporary buydown (2-1 or 1-0)	Reduces the rate for the first year or two	The buydown period only	You want a lower payment in the first year or two
Seller or builder credit	Seller or builder money pays for points, a buydown or closing costs	Depends on how it is used	Resale or new-construction purchases with room to negotiate
Homestead and other exemptions	Lowers the taxable value of your home	Every year you qualify	You own and live in the home as your primary residence
Appraisal protest	Challenges the appraisal district's value	That tax year	You think the appraised value is too high
Dropping mortgage insurance	Removes a monthly charge	Permanent once removed	You have a conventional loan and your equity is growing
Shopping lender and insurance quotes	Rate, fees and premium	Varies	Always

Should you pay points to buy down your rate?

Points make sense when you will keep the loan long enough to earn back what you paid. The Consumer Financial Protection Bureau defines one point as one percent of the loan amount, and it says points on your Loan Estimate must come with a lower rate. How far a point moves the rate depends on the lender and the day.

To judge whether points are worth it, find the break-even: the cost of the points divided by the monthly savings tells you how many months it takes to come out ahead. Then be honest about how long you will keep the loan. A buyer who expects to refinance if rates fall, or who may relocate for work in a few years, often does better skipping points or having the seller pay for them.

The CFPB's advice is simple and worth following. Get one quote with points and one without, ask every lender for the same number of points, and compare the total cost over the shortest, longest and most likely time you will have the loan.

How does a 2-1 or 1-0 temporary buydown work?

A temporary buydown lowers your rate at the start of the loan and then steps it back up. With a 2-1, the rate is two percentage points under the note rate in year one and one point under in year two. A 1-0 reduces only the first year. The money to cover the difference is placed in an account at closing and applied month by month.

For conventional loans sold to Fannie Mae, the Selling Guide caps the reduction at three percentage points, limits increases to one point per year, allows no more than three years, and permits buydowns on primary homes and second homes but not on investment property. The rule buyers most often miss: you qualify at the full note rate. A buydown makes the first year or two easier. It does not raise your price range.

Before you agree to one, ask the lender to show you the full payment you will have once the buydown ends, and ask in writing what happens to leftover buydown funds if you refinance or sell early. Your buydown agreement controls that answer.

How much can a Texas seller or builder put toward your buydown?

Each loan program caps how much a seller, builder or other interested party can contribute. That money can go toward points, a temporary buydown or closing costs. If you are shopping new construction around Anna, Celina or McKinney, builder incentives count against the same caps as a resale seller's credit, so ask how a builder's offer is structured before you compare it with a lower price elsewhere. For more on new-construction costs, read MUD vs. PID: what new construction buyers in Anna and Celina need to know.

Seller and builder contribution limits by loan program
Loan program	Maximum contribution	What to know
Conventional (Fannie Mae), primary or second home, more than 90% loan-to-value	3%	Seller- or builder-funded buydowns count toward the cap
Conventional, 75.01% to 90% loan-to-value	6%	Same treatment
Conventional, 75% loan-to-value or less	9%	Same treatment
Conventional, investment property	2%	No temporary buydowns on investment property
FHA	6% of the sales price	Can fund closing costs, discount points and permanent or temporary buydowns; builders count as interested parties
VA	4% of reasonable value in concessions	Standard closing costs and normal discount points are not counted; extra buydown points and temporary buydown funds are

Sources: Fannie Mae Selling Guide B3-4.1-02 and B2-1.4-04; HUD Handbook 4000.1; U.S. Department of Veterans Affairs concession rules. Individual lenders can set tighter limits.

A practical point on negotiating: a price reduction spreads a small saving across the whole loan, while the same dollars spent on a buydown often lower the payment more up front. Neither is automatically better. Ask your lender to run the numbers both ways for the specific home before your agent writes the offer. Our look at how much buyers negotiated on North Texas homes shows what the local data said.

Why do property taxes matter so much to a Texas mortgage payment?

Texas has no state income tax, and local property taxes do much of the work of funding schools, cities and counties. That makes exemptions one of the most reliable ways to lower an escrow payment, and first-year owners often overlook them.

Aerial view of a lakeside single-family neighborhood in Coppell, Texas in autumn

A North Texas neighborhood from above. Property taxes are set by the taxing units that cover each address.

Texas property tax tools that can lower your escrow payment
Tool	Amount or effect	Key date
School district residence homestead exemption	$140,000 off your home's taxable value for school taxes	Apply with your appraisal district, generally before May 1
Age 65 or older, or disabled	An additional $60,000 off school district taxable value	Apply with your appraisal district
Local option homestead exemption	Up to 20% of appraised value (at least $5,000), if a city, county or other taxing unit adopts it	Varies by taxing unit
Appraisal protest	A chance to lower the appraised value the district set	May 15 or 30 days after your notice is delivered, whichever is later

Source: Texas Comptroller of Public Accounts, Property Tax Exemptions and Property Tax Law Deadlines. Check exact rules with Collin Central Appraisal District or the Grayson Central Appraisal District.

If you buy this fall, put the homestead application on your calendar for early next year. Your lender will usually set your escrow based on the seller's prior tax bill, and once your exemption is in place, your escrow can be adjusted at the servicer's next annual review. Ask your servicer how and when they recalculate.

Homeowners insurance is the other half of escrow. Compare quotes with a licensed insurance agent before closing and again at each renewal, and review your deductible choices, since they affect your premium.

What else can you do once you own the home?

Drop private mortgage insurance. The federal Homeowners Protection Act, as the CFPB explains it, lets you ask in writing to cancel PMI once your balance is scheduled to reach 80% of the home's original value, and it ends automatically at 78% if you are current. FHA mortgage insurance has its own rules, and refinancing is often how owners remove it, so check with your servicer.

Recast after a windfall. Some lenders will recalculate your payment after a large principal payment, for example after you sell a previous home. Not all loans qualify.

Refinance if rates ease. If rates come down meaningfully, a refinance can lower the rate itself. That possibility is one more reason to weigh points carefully today.

Frequently asked questions about buydowns, points and seller credits in North Texas

Can a builder in Collin County pay for my rate buydown?

Yes. Builders count as interested parties, so their incentives can pay for points or a temporary buydown, up to the same loan program limits that apply to any seller.

Do I qualify for a mortgage at the lower buydown rate?

No. For conventional loans sold to Fannie Mae, lenders must qualify you at the full note rate, so plan your budget around the payment after the buydown ends.

How much is the Texas homestead exemption?

The school district residence homestead exemption is $140,000 off your home's taxable value for school taxes, with an additional $60,000 for owners who are 65 or older or disabled, according to the Texas Comptroller of Public Accounts.

Are discount points better than a temporary buydown?

Points lower the rate for as long as you keep the loan, so they suit buyers who expect to stay for years. A temporary buydown helps only in the first one to three years, so it suits buyers who want short-term relief, especially when a seller or builder pays for it.

When can I remove PMI?

You can ask in writing to cancel private mortgage insurance when your balance is scheduled to reach 80% of the home's original value, and it ends automatically at 78% if you are current on payments.

What is a 2-1 buydown?

A 2-1 buydown lowers your interest rate by two percentage points in the first year and one point in the second year, then the rate returns to the note rate. You still qualify at the full note rate.

Bottom line: what should North Texas buyers do first?

With the average 30-year rate at 7.40% in mid-October, North Texas buyers have real tools to work with. Ask for seller or builder money where it is available, choose points or a temporary buydown based on how long you will keep the loan, and treat your homestead exemption as part of your payment plan, not an afterthought. Getting each option priced in writing before you make an offer is what turns these ideas into savings.

Compare your options before you write an offer. Tried & True Home Loans can price your loan with no points, with points, and with a seller- or builder-funded temporary buydown so you can see the difference for a specific home. A Rise Realty Texas agent can then help you ask for the right credit on a resale or compare builder incentives across communities in McKinney, Anna, Celina, Sherman and Denison. Call Tried & True at 866-344-8845 or visit triedandtruehomeloans.com. To talk with a Rise Realty Texas agent, call (888) 774-7315 or explore the areas we serve.

For more on local conditions, see how much buyer leverage each North Texas county has right now and how new construction is changing the market in Anna.

Affiliated business disclosure: Rise Realty Texas has a business relationship with Tried & True Home Loans, and this referral may provide Rise Realty Texas a financial or other benefit. You are not required to use Tried & True Home Loans as a condition of buying or selling a home with Rise Realty Texas, and you are free to shop for a mortgage with any lender. Tried & True Home Loans, NMLS #2034819. Equal Housing Opportunity. Verify licensing at NMLS Consumer Access.

This article is general information about Texas real estate and mortgage options, current as of October 22, 2026. It is not lending, legal, tax or financial advice. Program rules and lender standards change, so talk with a licensed loan officer, tax professional or attorney about your situation. Rise Realty Texas LLC · TREC #9016637-BB.