How San Diego Buyers Can Beat High Interest Rates with Seller Credits

High rates give San Diego buyers leverage

Rates are up. The average 30-year jumbo rate is sitting around 7.5% in early October 2026 (U.S. News). That keeps a lot of buyers on the sidelines, and fewer buyers means sellers are more open to negotiating.

Most buyers only negotiate on price. Smart buyers negotiate on payment. A seller credit aimed at your interest rate can save you three times more each month than a price cut of the same size.

Step 1: Ask the seller for a 2% credit

Instead of only asking for a lower price, ask the seller to put about 2% of the purchase price toward your loan costs. On a $1.5M home, that is $30,000.

Sellers often prefer this. Their sale price stays strong for the comps, and their net is about the same as a price cut.

• Your loan type caps the credit. Conventional loans allow 3% with under 10% down, 6% with 10% to 25% down, and 9% with more than 25% down. FHA allows 6%, VA allows 4%, and jumbo limits are set by each lender.
• It is not cash back. The credit can cover closing costs, prepaids and rate buydowns only.
• Put it in the offer. It is much harder to add once you are in escrow.

Step 2: Use the credit for a temporary buydown

A temporary buydown lowers your rate for the first one to three years, then steps up to your full rate. The seller's credit is held in an account that tops up your payment each month.

Think of it like a gym intro offer: cheaper at the start, full price later, and you know exactly when it ends.

• 3-2-1 buydown: 3% below your rate in year 1, 2% below in year 2, 1% below in year 3.
• 2-1 buydown: 2% below in year 1, 1% below in year 2.
• 1-1 buydown: 1% below for years 1 and 2.

Most lenders still qualify you at the full rate, so a buydown helps cash flow, not buying power.

Real example: a $1.5M San Diego home

On a $1.5M purchase, a 2-1 buydown uses almost exactly a 2% credit and saves about $1,578 a month in year one.

Assumptions: 20% down ($300,000), a $1.2M loan at 7.5% on a 30-year fixed, and a $30,000 seller credit. Payments are principal and interest only.

The 1-1 leaves about $10,700 of the credit for closing costs. The 3-2-1 needs closer to a 4% credit on a loan this size.

If rates fall in the next couple of years, you refinance. Any unused buydown funds usually go toward your loan balance.

Temporary buydown vs buying points

A temporary buydown is a discount that expires. Buying points lowers your rate for the life of the loan.

One point costs 1% of your loan amount, not the purchase price. On a $1.2M loan, that is $12,000. Each point usually drops your rate about 0.25%, though it can range from 0.125% to 0.375% depending on the lender and that day's pricing.

Your down payment matters because it sets the loan size. Put more down and every point gets cheaper.

Here is the same $30,000 used three ways:

Points break even in about five years. After that, every month is pure savings.

Which one fits you?

• Expect to refinance in a year or two: go temporary. You get the biggest savings up front.
• Holding the loan five years or more: buy points. The savings never expire.
• Want both: split the credit, part toward a 1-1 buydown and part toward points.

Every lender prices this differently, especially on jumbo loans, so run your numbers with a lender before you write the offer. Figures above are estimates for illustration, not a loan quote.

Buying in San Diego and want to structure an offer like this? Call or text Josh Taylor at Compass on 760.704.3820, email [email protected], or visit aussiejosh.com.

Sources

• U.S. News: Today's mortgage rates, Oct. 2, 2026