Should a first time home buyer in Orange County wait for rates to drop?
No. With rates at 7.40% (Freddie Mac, October 8, 2026), fewer Orange County buyers are competing, so you can pick the home you want and negotiate the seller to pay your rate down. On an $800,000 loan, $16,000 toward the rate saves about $270 a month. Rates are expected to stay elevated, and any drop brings buyers and bidding wars back.
If you’re a first time home buyer, Orange County at 7% doesn’t have to mean sitting out. In this video I walk through the three ways I negotiate for first time buyers at 7% rates, the deal that got my buyer into the 6s under asking, and the math on the same $16,000 from a seller used two different ways.
By Austin Criss, REALTOR® | RE/MAX TIFFANY | October 20, 2026
What did 7% rates do to homes under $1 million in Cypress and Buena Park?
They slowed the market down and left more homes sitting. The Freddie Mac 30-year average hit 7.40% on October 8, 2026, the highest since November 2023. At 7%, a lot of buyers decide it’s too unaffordable and wait. That means more homes and fewer buyers.
I pulled CRMLS for Cypress and Buena Park on October 7, 2026, because a lot of first time buyers in Orange County buy there. Here’s what I found under $1 million:
- 86 homes for sale
- Half of them on the market 30 days or more
- About one in three had already cut its price
- The ones that cut had been sitting about two months. The ones that didn’t, about two weeks
The well-priced, well-marketed homes are still selling. What I’m seeing is homes that came on overpriced, lost buyer interest, and sat through price cuts. A lot of buyers skip them because they assume something is wrong with the house. In my experience that’s usually not the case. I’ve been in these homes, toured them, and gotten offers accepted on them.
Who’s selling matters too. Across Cypress, Buena Park and the rest of North Orange County I’ve seen relocation sellers who took a job somewhere else and have to sell, and investors with fully remodeled homes who burn cash every day the home sits. Those sellers are open to concessions.
What are the three ways I negotiate for first time buyers right now?
- The price. The one everybody thinks of. A lower price lowers your payment.
- A seller credit. The seller pays your closing costs.
- A seller-paid rate buydown. The seller pays discount points so your rate is lower for the whole loan. The one almost nobody asks for.
These aren’t either-or. My buyer’s last deal used all three. Which one leads depends on your cash, your payment, and how soon you want to get in.
Is a seller credit better than a lower price?
If you’re light on cash, often yes. Closing costs run roughly 2% of the purchase price, so about $18,000 on a $900,000 home. Would you rather buy that home for $880,000, or pay $900,000 with zero closing costs? The credit keeps roughly $18,000 to $20,000 in your bank account.
The tradeoff is small. $20,000 more on a 30-year loan is about $140 a month at these rates. For my clients who are cash-strapped, that’s worth it. I walk through the limits and what a credit can cover in seller concessions in Orange County.
How does a seller-paid rate buydown work?
You negotiate for the seller to pay discount points. A point is money paid up front so your interest rate is lower for the whole loan, except the seller pays it, not you. One point costs 1% of the loan, and as a rule of thumb each point knocks about a quarter off the rate. It depends on the lender’s pricing that day.
Here’s the example from the video: a $900,000 home, $100,000 down, an $800,000 loan at 7.25%. One point is $8,000.
| Seller pays | Points | Approx. rate | Monthly P&I | Savings per month |
|---|---|---|---|---|
| $0 | 0 | 7.25% | $5,457 | None |
| $8,000 | 1 | About 7.00% | $5,322 | About $135 |
| $16,000 | 2 | About 6.75% | $5,189 | About $270 |
| $24,000 | 3 | About 6.50% | $5,057 | About $400 |
Principal and interest only, 30-year fixed. $24,000 is the very high end, and I’m using it purely as an example. For more on how points pay back over time, see mortgage rate buydowns in California.
Why does $16,000 toward the rate beat $16,000 off the price?
Because the rate touches every dollar of the loan. Same seller money, more than double the monthly savings.
| Same $16,000 from the seller | What changes | Monthly savings |
|---|---|---|
| Off the price ($900,000 to $884,000) | Loan drops to $784,000 at 7.25% | About $110 |
| Toward the rate (2 points) | Rate drops from 7.25% to about 6.75% | About $270 |
This isn’t a hypothetical for me. I just got a first time home buyer in Orange County into escrow with a $10,000 seller-paid rate buydown, $5,000 more in seller credit, and a price under asking. It got them into the 6s. We did all three.
I also price the rate with more than one lender. If a rate seems high, we get another option.
When does a seller-paid buydown not work?
When the seller doesn’t need to sell. If they’ve built up a ton of equity, life is good, and they’re just testing the market, this isn’t going to work.
Before I write the offer, I figure out both sides:
- Your situation: Do you have cash or are you light on cash? Would you rather have a lower payment? How soon do you want to get in?
- The seller’s situation: Do they need to sell? Do they care most about price, or about a nice, easy, smooth transaction?
- Their agent: Who is it, and are they going to fight tooth and nail on price?
Most sellers want to sell and move on to the next chapter. Some have been sitting on equity for 15, 20 or 30 years, and not everything is dollars and cents to them.
How much can a seller give you?
There’s a cap, and it depends on your loan and your down payment. Your lender gives you the exact number. For a conventional loan on a home you’ll live in, Fannie Mae Selling Guide B3-4.1-02 sets these limits:
| Down payment | Loan-to-value | Max seller contribution |
|---|---|---|
| Less than 10% | Over 90% | 3% |
| 10% to 25% | 75.01% to 90% | 6% |
| 25% or more | 75% or less | 9% |
In the video example, $100,000 down on $900,000 is about 89% loan-to-value, so the cap is 6%, or $54,000. A $16,000 buydown sits well inside it. A buydown funded by the seller counts toward the cap.
Why did I buy in 2024 anyway?
Because I wanted the lifestyle more than I wanted to time the market. I bought in 2024 at a low 6% rate, and the price was high. Next to 2020, my payment and price look ridiculous. I pushed my pre-approval all the way.
It was a starter home, about 1,000 square feet. Not enough bathrooms, not the backyard I wanted, not turnkey, and green shag carpet. But it had my non-negotiables: the price, the location, the bedrooms, and the neighborhood I wanted. It’s already appreciating, and we’re getting ready for the move-up stage in the next few years.
If you’re weighing the same move, my first time home buyer guide for Orange County covers the full process, and my Cypress city page covers where a lot of these homes are.
Frequently Asked Questions
Can the seller pay for my rate buydown in Orange County?
Yes. In Orange County you can write the offer so the seller pays discount points toward your rate instead of cutting the price. The money comes off the seller’s side at closing and buys your rate down for the whole loan. It counts toward the cap on what a seller can give you, so your lender confirms the number before the offer goes in.
How much does one discount point lower my rate?
One point costs 1% of your loan amount. As a rule of thumb, each point lowers your rate by about a quarter percent, though it depends on the lender’s pricing that day. On an $800,000 loan, one point is $8,000, which takes a 7.25% rate to about 7%. Ask more than one lender to price it.
How much can a seller give a first time home buyer in Orange County?
It depends on the loan and your down payment. On a conventional loan for a home you’ll live in, Fannie Mae caps seller contributions at 3% with less than 10% down, 6% with 10% to 25% down, and 9% with 25% or more down. Other loan programs have their own limits. Your lender tells you the exact number.
Is a seller credit better than a lower price?
If cash is tight, usually yes. Closing costs run roughly 2% of the price, about $18,000 on a $900,000 home. Paying $900,000 with zero closing costs keeps that money in your account, and $20,000 more on the loan only adds about $140 a month at current rates. If the monthly payment is the problem, put the money toward the rate.
Are homes under $1 million sitting in Cypress and Buena Park right now?
Some are. When I pulled CRMLS for Cypress and Buena Park on October 7, 2026, there were 86 homes for sale under $1 million, and half had been on the market 30 days or more. About one in three had already cut its price. Well-priced homes still sell, but the ones that sit leave room to negotiate.
Video transcript: Don’t Wait for Rates to Drop | First Time Home Buyer in Orange County
Rates are over 7% (0:00)
Interest rates are over 7% and buyers are leaving the market in droves. Maybe you’re one of them. You’re thinking, “It’s just too unaffordable right now. I’m just gonna wait for the rates to drop.”
But here’s the thing, educated buyers are taking full advantage of this market shift. And when demand leaves, what does that leave us with? Deals.
I just got a first-time home buyer in Orange County into escrow under asking price with huge seller credits. It is an opportunity, folks, if you know how to handle it. I’m gonna break down exactly how I negotiate these, and the third one is the golden nugget that actually reduces your monthly payment. So let’s get into it.
I’m Austin Criss, the realtor who tells it like it is. Here’s what we’re actually covering. What 7% actually did to the market, and why that’s an opportunity for you. Then the three strategies I use to get my buyers their home of choice at the best deal possible.
Stick around for number three, because that’s how I get my buyers a huge seller credit and a rate in the sixes. And at the end, I’m gonna tell you how I bought my own house, because I also bought in a tough market.
What 7% did to the market (1:04)
So the market has drastically slowed down. Freddie Mac has the 30-year average at 7.4% right now, and that’s the highest it’s been since November 2023. And at 7%, we lose a drastic amount of buyers.
This is a psychological effect because the buyers are thinking 7% is just way too unaffordable. I’m just gonna wait. So what does that do to prices? What does that do to inventory? We’re gonna have more homes on the market and less buyers out there.
86 homes under $1M in Cypress and Buena Park (1:30)
I pulled the MLS in Cypress and in Buena Park. A lot of first-time home buyers buy there. Under a million dollars, there are 86 homes for sale right now, and half of them have been sitting 30 days or more.
And don’t get me wrong, the well-priced, well-marketed homes are still selling, but there are some sellers out there making the mistake of overpricing the home initially, and that absolutely kills buyers’ interest. Then when they finally reduce the price, the buyer’s no longer interested, so it sits on the market, it sits, and eventually another price decrease.
If you’ve been in the market the past few years when interest rates were super low, it was an absolute feeding frenzy. These homes would have gotten picked up instantly, overpriced or not. Prices kept going up and up. Now they kind of finally plateaued, slightly appreciating, and the inventory is building.
Why good homes are sitting (2:19)
These are really good homes. They just initially did not price it well, did not market it well, and now they’re paying the price for it.
So a lot of buyers are looking past them because they think, “Oh man, something has to be wrong with this home.” That’s just not the case. I’ve been in these homes, I’ve done home tours, and I’ve gotten offers accepted on these homes, and it is an opportunity.
And here’s the number that tells the whole story. About one in three of those homes has already cut its price. The ones that cut their price, they’ve been sitting about two months. The ones that didn’t, about two weeks.
Who’s selling right now (2:53)
And look at who’s selling right now, because that is also really important. I’ve seen listings in Buena Park, Cypress, all over North Orange County where it’s relocation. They got a job somewhere else, and they have to sell. At the end of the day, those people are going to sell.
I’ve also seen the investors selling fully remodeled properties, and they’re burning cash every day that home sits on the market. So look, at the end of the day, there needs to be some concessions to sell these homes.
The savvy, educated buyers are the ones succeeding right now, and they’re getting their home of choice. And the buyers who are leaving, it’s because nobody showed them the strategy to get a monthly payment they can afford and a home price that works for them.
Strategy 1: the price (3:30)
So here’s how I do it. There are three ways. The first one is the one everybody thinks of. The third one is the one almost nobody asks for.
The first and most clear one is the price. If I get a lower purchase price, the monthly payment goes down, 100% correct. But that’s only one thing we’re working on, and here’s the big idea.
When the rates are at 7% and the market is favoring buyers, am I going to worry too much about the purchase price? No. You wanna know why? ‘Cause there are other options depending on your situation, and it’s different for everybody.
Strategy 2: seller credit for closing costs (4:02)
The second one is the seller credit. That just means the seller pays your closing costs for you. Let’s say you don’t have a lot of cash, you’re not putting a lot down, and you still have to pay closing costs, which is roughly 2% of the purchase price. So on a $900,000 home, you’re paying about $18,000 in closing costs.
So let me ask you a question. Would you rather get that home for $880,000 or pay $900,000 and have zero dollars in closing costs? That keeps roughly $18,000 to $20,000 in your bank account. The monthly payment difference on $20,000 over 30 years is about $140 a month at these rates. And for my clients who are cash-strapped, that’s worth it.
The seller credit is one of the best negotiating tactics to get the home they want at the best deal possible. And sure, we could play the purchase price game all day long as well. This is not a mutually exclusive strategy. Just because we do one doesn’t mean we can’t do the other as well.
But if you want that monthly payment to really come down, there’s a better way to spend that same seller money. That’s number three.
Real quick, I walk my buyers through all of this, from getting pre-approved to getting the keys. I put it all in my free buyer guide. The link is in the description.
Strategy 3: seller-paid rate buydown (5:15)
Now the third option, and the best option I’d say right now with high interest rates. You negotiate for the seller to pay discount points to get the buyer’s rate down. A point is basically money paid up front so your interest rate is lower for the whole loan. Except here, the seller is paying it, not you.
My buyer’s deal (5:34)
I just got a first-time home buyer in escrow with a $10,000 rate buydown, plus an extra 5K in additional seller credit, and it got my buyers right into the sixes, plus under asking. We just did all three.
But here’s what it looks like. For easy numbers, say the rate is 7.25% and the home is $900,000. You put $100,000 down, so the loan is $800,000. One point is 1% of the loan, so $8,000. And roughly every point knocks about a quarter off your rate. It depends on the lender’s pricing that day, but it’s a good rule of thumb.
So if I negotiate $8,000 from the seller, that brings it to about 7%. $16,000, you’re at 6.75%. $24,000, you’re around 6.5%. And that’s at the very high end. I’m just using it purely for example purposes.
Same $16K, two very different payments (6:25)
Now here’s the golden nugget, and here’s why I love this. Take that same $16,000 off the purchase price and your payment goes down about $110 a month. Put it towards your rate, and it goes down about $270 a month. Same money from the seller, more than double your savings.
And my lender is super amazing at getting the best rate possible. If a rate seems a little high, we get another option. I have multiple lenders I use so you’re getting the best deal possible.
Reading the seller (6:56)
Now, this doesn’t work on every home. Here’s when it does. Like I said, you can mix and match. Negotiation is like a dance. There’s give, there’s take. It’s all about strategy and leverage.
First, what’s your situation? Do you have cash? Are you light on cash? Would you rather have a lower monthly payment? How soon are you looking to get in?
I take care of my buyer and I make sure all their interests are protected, but just as important, I’m figuring out the seller’s situation as well. So one, do they need to sell? Two, who is their agent? Is the agent really going to fight tooth and nail for them? Does the seller care too much about the price, or do they want a nice, easy, smooth transaction?
I dig and probe to figure out the seller and agent situation so I can best protect my clients and get them the best deal possible.
How much a seller can give you (7:37)
There is a cap on how much a seller can give you. It depends on your loan and how much you put down. Your lender will tell you the exact number.
And like I said, this may not work on every home. Say a seller doesn’t need to sell. They’ve built up a ton of value in that home, life is good, and they’re just seeing if they can get a dollar. No, this isn’t gonna work.
But for the vast majority of people who put their home on the market, they want to sell, and they want to move on with the next chapter of their life. They know buyers are struggling with the rates, with the prices. Some have been sitting on that equity for 15, 20, 30 years, and they’re ready to move on with their life. Not everything is dollars and cents to them.
How I bought my first home (8:11)
I know how tight it is for buyers because I was one. I bought in 2024 with a low 6% interest rate, and the price was high. And yes, comparing my payment and my purchase price to 2020, it’s absolutely ridiculous, but I wanted to buy my lifestyle. I wanted a home where I could raise my kids around my family. So I went ahead and did what I needed to do, I pushed my pre-approval all the way.
Realistically, you’re not gonna end up in your dream home right away. I bought a starter home. It was about 1,000 square feet, honestly didn’t even wanna go look at the home. The square footage was too small. It didn’t have enough bathrooms for me. The backyard wasn’t what I wanted. I wish it was more turnkey. The carpets were green shag carpet, folks. That tells you something.
But it did have my must-haves: the price, the location, the bedrooms, and it was in the neighborhood I liked, and I felt safe.
Now, our family is expanding. We’re growing, and we’re literally having the best time of our life. My wife and I talk about it every week, and I kid you not, this is 100% fact, every week we tell each other how lucky we are to own this home. It’s one of the best decisions I’ve made in my entire life, and I stand by that 100%.
And my home is already appreciating. We are getting ready for the move-up buyer stage. That’s gonna be in the next few years.
So that’s what I’m telling buyers right now. This is an opportunity. You just need to know how to handle it, and you need an agent who’s gonna guide you strategically, have your back 100%, and walk with you side by side.
Your turn (9:33)
So let me ask you, if a seller offered you $16,000, would you take it off the price or put it towards your rate? Drop it in the comments. I love to hear what everyone is feeling and thinking.
And if you wanna see what one of these homes actually looks like, go watch this home tour right here, and the free buyer guide is in the description. Have a great day.
If you’re thinking through this for your own purchase, I’m happy to run the numbers with you. Grab my free buyer guide at austincriss.com/buyer-guide, or call or text me at 714.600.1176. Always Ask Austin.
About Austin Criss
Austin Criss is a REALTOR® with RE/MAX TIFFANY serving Cypress, Buena Park, Anaheim, and Orange County, California. Licensed in California since 2020 and working in real estate since 2017, he helps first-time buyers and move-up families from first question to closing. Call or text him at 714.600.1176, or visit austincriss.com.