Episode summary
How to Get a 5% Mortgage Rate Right Now
Biggerpockets
· · Hosts: Dave
Summary
Higher mortgage rates are making rentals harder to underwrite, but the host argues investors do not have to accept a 7% or 8% loan. The episode lays out six ways to get a lower rate now, with much of the discussion focused on buy downs and other negotiation tactics that can improve cash flow immediately rather than relying on a future refinance.
The host explains the difference between temporary and permanent buy downs, then argues that the best opportunities come from leveraging market conditions: seller concessions, builder incentives, and turnkey provider relationships. In the host’s view, builders and turnkey operators are especially motivated to move inventory and often understand how to structure concessions or work with portfolio lenders that bypass conventional caps.
The episode also covers seller financing and assumable mortgages as more creative paths to 3% to 5% rates, especially for owner-occupants and house hackers. The final strategy is self-funding a rate buydown, which the host says can make sense for long-term holds because the upfront cost can be outweighed by years of lower payments and less total interest.
Key takeaways
- The host says investors should underwrite deals to cash flow at the actual purchase rate, not assume they can refinance later.
- Seller concessions can be powerful in today’s market, but conventional loans typically cap them at 2% of price; owner-occupants may access 9% in some cases.
- The host says builders are often the best source of large concessions because they want to move inventory and dislike visible price cuts.
- Seller financing can produce 3%, 4%, or 5% rates if the seller cares more about price and terms than a bank-style payoff.
- Assumable FHA, VA, and USDA loans can let a buyer take over a sub-4% mortgage, but the buyer still has to cover the equity gap.
- Buying down points yourself can make sense for a 10- to 15-year hold, according to the host’s payback math.
Notable quotes
“there are multiple ways to get your mortgage rate down to 6%, 5%, or even lower”
“I have hated that advice for years now. And I'm feeling a little vindicated about that because now a lot of people are realizing that wasn't a good strategy”
“a buy down is basically it allows you to pay upfront to lower your mortgage rate”
“Builders are in a rough spot right now. They are in a worse spot than their traditional seller”
“If you can figure out a way to get a property on seller financing, three, four, 5% mortgage rates are absolutely possible”
Topics
- mortgage rate strategy
- interest rate buydowns
- seller concessions
- owner financing
- taking over someone else's rate
Companies and tickers mentioned
- Fundrise
- Mynd
Watch the episode
Watch “How to Get a 5% Mortgage Rate Right Now” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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