I'm a mortgage loan officer and I write homebuyer tips for first time buyers.

Last time I talked about some good news for first time buyers and the trends we're seeing nationally (lowering prices, growing inventory). I wanted to follow up with something you can actually do to work that in your favor.

If inventory is high in your area, and if homes are sitting on the market for a long time, you may have leverage. Most buyers don't know how to turn that leverage into buying power, because the number that matters is hidden from them. This post answers: what should you ask your realtor for to unlock that leverage, and how does it change what you can afford?

A Little Setup for Context

When you see that a property is under contract (like when it flips on Zillow from for sale to pending) it doesn't mean that it is under contract for the list price.

Once the home sells, some states allow the actual sold price to go public, while others don't. Utah, for example, is a non-disclosure state, and will not reveal to the public the final purchase price.

Even if the actual sold price is revealed, it doesn't show you one important thing: how much did the seller give toward closing costs?

Those are called concessions. Agents will call this "seller concessions" or "seller credits."

Your real estate agent may have access to see that information. A lot of MLS platforms actually require agents to notate concessions in a sale so that appraisers can more accurately evaluate home values.

This is important, because closing costs can be paid by seller concessions. If you can see whether sellers are regularly giving concessions, you can much more accurately determine how much cash you'll actually have to bring to closing.

What to Ask Your Agent

Ask for this specifically:

"Can you pull the last 10-15 closed sales in this area, a little above my price range, and show me list price vs. actual sold price, plus any seller concessions noted in the MLS?"

You're looking for a pattern. If it comes back looking something like average list price ~$650k, average sold price ~$640k, average seller credit ~$15,000, then you have room to work with.

Here's the Math

Let's do an example for California. I'm a mortgage broker there so I'll give live rates to make it as realistic as possible.

Let's say my budget is $4,000 per month and I can't go over that. It's comfortable for the budget, but anything above is uncomfortable.

I have $130k cash to put toward the mortgage (down payment and closing costs).

Here's what you might think: "rates are on average 6.78%, and if I set aside $110k for a down payment and $20k for closing costs, then this might get me a ~$610k purchase price depending on mortgage insurance."

If $610k priced homes don't meet what you need, don't get discouraged yet. Let's run an example using a $650k home instead.

Let's take a $650k list price in Riverside.

  • 20% down payment at $130k (to simplify, minimum is 3% down for first time buyers). Putting 20% also freed up some of the payment, because mortgage insurance is no longer a factor.
  • Homeowners insurance estimate at $250 per month
  • Property tax estimate at $450 per month
  • 780 credit score
  • Annual income is above $106,500 (only matters because income lower than $106,500 may get better rates for first time buyers)
  • Seller contributes $20k toward closing costs, which you've already discussed with your agent and know is well within the realm of possibility based on previous sales

Here's what happens. Rates come back looking like this:

  • 6.625% (closest to par), APR 6.709%, monthly payment $4,030, cash at closing (before credits) $142,980
  • 6.5%, APR 6.607%, monthly payment $3,987, cash at closing $144,254
  • 6.375%, APR 6.53%, monthly payment $3,944, cash at closing $146,827
  • 6.25%, APR 6.25%, monthly payment $3,902, cash at closing $150,051

Look at that top rate. At par, the payment is $4,030. That's over your budget. On its face this house doesn't work.

But you've got a $20k seller credit. Put it toward buying the rate down to 6.25%:

Cash at closing: $150,051 minus $20,000 = $130,051. That's your $130k. Monthly payment: $3,902. That's under your $4,000 ceiling.

This uses the same amount of cash and has about the same payment, but you get a ~$650k house instead of a ~$610k house.

When a Lower Rate Beats a Lower Price

Let's evaluate this for a second.

What a large $20k seller concession does is it lets you apply it toward a lower interest rate. And dollar for dollar, that does more for your payment than the same money taken off the price.

I'm going to round these numbers a bit, but a good rule of thumb right now is that for every $10k lower in purchase price, you lower your payment by about $60 per month.

Now put the same $4k head to head:

  • $4k in seller credits toward the rate (6.625% down to 6.375%) buys you $86 per month
  • $4k off the purchase price buys you roughly $25 per month

Same money, about 3x the monthly impact.

And if you look at the full spread above, going from 6.625% to 6.25% is a $7,071 difference in cash and $128 per month. That $7,071 applied toward a lower rate, while keeping the budget the exact same, can afford you roughly $15k to $20k more in purchase power.

Want to see how these numbers play out with your own budget? Run it through the payment and closing cost calculator before you go house hunting.

The 5 Year Rule (When the Higher Rate Beats the Lower Rate)

"But what about long term?"

If future equity is the number one thing on your mind, we should cover this.

If we pull up an amortization chart for a 6.625% rate but a $4,000 lower loan amount, then it has a $4k head start on the other loan (6.375%).

Let's see where the loan balances land after 5 years if you're making just the minimum payment.

  • 6.375% rate at year 5 balance = $486,072
  • 6.625% rate at year 5 balance = $483,722

The higher rate is ahead. And it isn't until year 12 that the lower rate/lower payment catches up and starts beating the higher rate/higher payment.

Keep this in mind when you're evaluating buying down the rate vs. having a lower starting loan amount.

Also remember, we lowered the rate so we could lower the minimum payment. And that's how I ran the calculation, making the minimum payments.

But if we matched payments (paid the same payment that you would on 6.625%) then the lower rate starts winning at year 3.5.

To Sum It Up

I've thrown a lot of numbers and scenarios at you. If I had to make a point, it would be this:

If you've run into a wall and can't find the right house in your budget, check past sold listings with your agent. See if sellers are regularly giving credits or selling below list price.

If they are, ask your loan officer to run scenarios for you on higher purchase prices with seller credits applied to the rate, not just to closing costs.

You might be able to buy quite a bit more house for the same monthly payment. If you want help running your own numbers, you can grab a free planning session with me.

Hope this helps.

-Sam

Priced August 24, 2026. Rates move daily.

All loan options assume a 780 credit score, today's rates as of August 24, 2026, a 30 day lock, a loan amount of $520,000, a home value of $650,000 and a loan-to-value ratio of 80%. The values and figures provided in this report are estimates only. Your actual rate, payment, and costs could be higher. Not a Loan Estimate, a commitment to lend, or an offer of credit. Get an official Loan Estimate before choosing a loan.

Samuel Thompson, NMLS #1052267, Integrity Lending, Company NMLS #1006977, AZ, CA, CO, FL, TX, UT

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.