You have probably seen banners around Frisco promising big builder incentives, limited-time savings, or below-market rates. It all sounds great when you are trying to make the numbers work. The challenge is separating the offers that deliver real value from the ones that are mostly marketing. In this guide, you will learn how common incentives actually work in Frisco, what to watch for, and the exact questions to ask before you sign anything. Let’s dive in.
Why incentives look big in Frisco
Frisco’s new-construction scene is active, with steady demand for master-planned communities in Collin County and a pipeline shaped by local permits and lot supply. When mortgage rates rose in recent years, many builders nationwide leaned on incentives to keep sales moving. In fast-growth suburbs like Frisco, incentives may be available, but how aggressive they are depends on current inventory and pricing.
To check local conditions before you negotiate, review regional data and community-level activity. You can monitor Collin County trends through MetroTex market reports, confirm value history at the Collin County Appraisal District, and see development patterns through City of Frisco Planning. These sources help you judge whether an offer fits the market or needs a closer look.
Common incentives and how they work
Price reductions and sales
Sometimes the simplest incentive is the best. A real price cut lowers the contract purchase price and reduces your loan amount. Keep in mind, advertised drops can apply only to select quick-move-in homes or require specific options, so verify which homes qualify.
Closing cost credits
Builders often offer a credit at closing to offset your closing costs. This reduces the cash you need at the table, but it does not reduce your loan principal. Your loan program may cap how much a seller can contribute, so confirm with your lender that the credit fits your financing.
Rate buydowns
A temporary 2/1 or 1/0 buydown reduces your initial payments for a set period, while a permanent buydown lowers the rate for the life of the loan. These are often tied to a preferred lender. Ask for the buydown terms in writing, including start rate, end rate, who funds it, and how the funds are handled.
Free or upgraded options
You might see “free upgrades” for items like flooring, backsplash, or cabinetry. These can be valuable, but sometimes the base price is higher or the offer is limited to certain homes. Get a line-item list showing exactly what is included at no cost and what still requires a paid upgrade.
Lot premiums and location credits
A waived lot premium or a credit for a less desirable location can change your net price by thousands. Make sure any premium waivers are spelled out in the contract with a dollar amount.
Trade-in or move-in assistance
Some builders offer buyout or trade-in programs for your current home or provide leasebacks to help with timing. Terms vary and may involve market adjustments, so secure an independent valuation and read all disclosures.
Preferred lender incentives
Builders’ preferred lenders sometimes pair rate promotions with lender credits. Convenience can be a plus, but always compare the full cost across lenders, including rates, points, and fees.
What’s real vs. what’s marketing
Verifiable incentives
Real value shows up in writing. Look for contract price reductions, fixed dollar credits on the Closing Disclosure, and written buydown agreements with clear timelines. If it is on paper with exact amounts, it is easier to verify and enforce.
Conditional or unclear offers
Be cautious with “free” upgrades that require a higher-priced plan, incentives that only apply through a specific lender without clear fee comparisons, and “we’ll pay all closing costs” offers that include caps or exclusions. Ask for the maximum dollar amount and what costs are eligible.
Common bait-and-switch moves
Watch for ads featuring a low “starting at” price that assumes many paid options to match the model home. Also be wary of “before” prices that are not current and incentive bundles paired with non-transparent fees, like required amenity packages that raise your total cost.
Financing, appraisal, and Texas contracts
Seller concession limits
Loan programs often limit the amount a seller or builder can contribute to your closing costs and points. The exact cap depends on the program and your down payment. Review details with your lender and consult consumer resources like the CFPB for guidance on shopping and comparing loan terms.
Appraisal and underwriting
An appraiser will base value on comparable sales and condition. If the contract price, including options and lot premiums, is higher than the appraisal supports, you may need to bring the difference in cash or renegotiate. To compare offers, calculate the net effective price: contract price minus builder-paid credits.
How buydowns affect qualifying
Temporary buydowns reduce your early payments, but lenders typically qualify you based on the note rate that applies after the buydown period, unless specific rules say otherwise. Get clarity from your lender on the qualifying rate and documentation.
Texas contracts and disclosures
New-construction deals often use builder-specific contracts rather than standard resale forms. These can include clauses on options, change orders, completion timelines, arbitration, and more. Review your documents carefully, consider legal counsel if needed, and reference buyer protections and guidance from the Texas Real Estate Commission. Also verify HOA dues, utility district fees, and community standards through local sources like the City of Frisco Planning.
Where to verify program rules
For program-specific limits and underwriting, consult your lender and check the investor resources at Fannie Mae and Freddie Mac. FHA-related questions can be researched through HUD. These references help you confirm what is allowed for your loan type before you finalize an offer.
Your Frisco buyer checklist
- Get every incentive in writing. Make sure credits, amounts, and eligible costs are included in your sales contract.
- Ask if the incentive lowers the contract price or appears as a seller credit on the Closing Disclosure.
- Confirm whether you must use a preferred lender or title company to qualify. Request a written Loan Estimate so you can compare total costs.
- For buydowns, get a written schedule showing start rate, end rate, who funds it, and how funds are held or disbursed.
- Verify concession caps with your lender. Ensure your credit does not exceed program limits.
- For upgrades, request a line-item option sheet that shows included items and prices for add-ons.
- Ask if the builder will adjust the price if the appraisal is low. Request the breakdown: base price, lot premium, and options.
- Calculate net effective price: contract price minus any credits. Compare that to similar resale homes in Frisco.
- Include an appraisal contingency and clear timelines for completion and closing in your contract.
- Order an independent third-party inspection before closing and review warranty coverage.
- Verify HOA dues, special assessments, utility district fees, and long-term community plans.
- For trade-in programs, get independent valuations and read fee and timing disclosures carefully.
Red flags and negotiation tips
Red flags
- Incentive depends on a required lender without transparent fee and rate comparisons.
- “Up to” language without a firm dollar amount or written cap.
- Contract terms that allow changes to included options after signing without your consent.
- A large credit paired with a higher price that leaves your net effective cost worse than nearby resale options.
Negotiation tips
- Compare offers using net effective price and your monthly payment after incentives.
- Bring quotes from independent lenders to benchmark the builder’s lender.
- Ask for incentives that improve livability, like meaningful structural or design upgrades, rather than small credits you might not use.
- If using a buydown, confirm the funds are escrowed and documented in writing.
- Time your negotiation around inventory. When supply builds up, incentives are often more flexible.
Bottom line
In Frisco, the best builder incentives are the ones you can verify in writing and that fit your loan rules, appraisal, and timeline. Focus on the math that matters: net effective price, your total cash to close, and your monthly payment after any buydown period. With a clear checklist and the right comparisons, you can turn a marketing pitch into a smart deal.
If you want a second set of eyes, we can walk you through current Frisco communities, incentive fine print, and lender quotes so you can decide with confidence. Schedule a free consultation with Seek Real Estate.
FAQs
What are builder incentives in Frisco new construction?
- Builders may offer price reductions, closing cost credits, rate buydowns, free upgrades, or waived lot premiums to help make a deal. The value depends on your loan rules and what is written in your contract.
How do rate buydowns offered by builders work?
- A builder funds a temporary or permanent rate reduction, often through a preferred lender. Temporary buydowns lower early payments, but lenders usually qualify you at the note rate that applies after the buydown ends.
Do builder closing cost credits reduce my mortgage amount?
- No. Credits lower your cash at closing but do not reduce the loan principal. Check with your lender for concession limits under your specific loan program.
Can I use my own lender and still get incentives?
- Sometimes. Many incentives are tied to a preferred lender. Ask for a written cost comparison and see if the builder will extend similar value if you use the lender of your choice.
How do incentives affect appraisal on a new Frisco home?
- Appraisers base value on comparable sales, not the size of your incentive package. If the home does not appraise at the contract price, you may need to renegotiate or bring cash for the difference.
