You saw the billboard: 3.49 percent on a brand-new build, and suddenly the new house down the street looks affordable. Here is what nobody puts on the billboard, Patriot Nation: that rate is usually a temporary buydown with an expiration date. The real question is not what the first payment looks like, it is what the payment looks like in year four, after the teaser wears off.
PATRICK'S QUICK ANSWER
Yes, the rate is real, but it is usually a temporary buydown, not a permanent one. On a 2-1 buydown you pay 3.49% the first year, 4.49% the second year, and the full note rate from year three on. The fine print and the APR tell you what the loan really costs, so compare the APR and the year-three payment, not just the teaser. Ask Patrick how 3.49% builder rates would affect your payment.
A 3.49% advertised builder rate is real money, but it is a teaser, not a lifetime rate. Builders buy the rate down for the first year or two to make the payment look small, and the full note rate shows up after the buydown ends. The 60 to 80 word version of the truth: the headline number is the first-year rate on a temporary structure, the APR is the honest cost, and the payment steps up on a schedule you can read before you sign.
Why the teaser looks so good
The term "buydown" means someone paid money up front to lower the rate for a set period, and with a builder offer that someone is usually the builder. On a $450,000 home with 5% down, a 3.49% first-year payment runs about $1,917 in principal and interest, while the same loan at the 7.03% market rate runs about $2,853. That $936 monthly difference is why the billboard works, and it is also why you have to read the schedule underneath it.
The money consequence is the schedule itself. After a 2-1 buydown, the payment steps up after year one, steps up again after year two, and then sits at the note rate for the remaining 27 years. The teaser is real money for the first two years; the question is whether your budget can absorb the step-ups when they land.
Read the APR, not the headline
The APR spreads the cost of the buydown, the points, and the fees over the loan term, so it is the number that tells you whether the teaser is actually cheap. A 3.49% first-year rate on a buydown can carry an APR near 6.28%, which is a different story than the headline.
The real-world consequence: if you plan to stay past year three, the question is never "what is my first-year payment" and always "what is my payment in year four." The full breakdown of every San Antonio builder incentive structure, including verified offers, is in the San Antonio Builder Incentives, Decoded guide.
The year-three question: can you live with the note rate?
When the buydown ends, your payment steps up to the full note rate and stays there for the life of the loan, unless you refinance or sell. That means the honest way to shop a builder's 3.49% offer is to compare the year-three payment against what an outside loan would cost you over the same period, including the rate you lock today.
The money move: know your exit plan before you sign. If you expect to hold the house long term, the step-up is a real budget line you must plan for. If rates drop before year three, a refinance can replace the buydown with a permanent lower rate, but do not buy a home counting on a refinance that has not happened yet. Underwrite the note rate, treat the teaser as a bonus, and the decision becomes easy.
Before you sign with a builder, run the numbers with Patrick.
He is a loan officer and a REALTOR, so he decodes the teaser, compares the builder's offer against outside financing, and tells you which one actually saves money.
Ask Patrick about 3.49% builder rates and whether they are real
Get a straight answer on 3.49% builder rates and whether they are real and what it means for your payment and budget.
