Lending Caps Decide How West Pasco Builders Discount New Homes

"4.99%* interest rate (6.742% APR)."

That line is the headline of Hayden Homes' fall "Save Your Way" promotion. It applies to its West Pasco communities, including Madison Park North and Alvarado Place. The 4.99% is the rate printed in large type, and the 6.742% APR is closer to what the loan costs. The gap between them is a good guide to how new-home pricing works in Pasco right now. The builder discounts are real, and many of them sit inside the loan terms, so the list price doesn't show them. How large a discount is also decides what form it can take, because federal lending rules cap and count these incentives.

For anyone comparing a new build off Road 100 or Road 115 with a resale elsewhere in the Tri-Cities, the list price is the least informative number on the sheet.

The rate on the sign and the rate on the disclosure

According to Hayden's offer page, the 4.99% figure comes from a one-year temporary buydown on select homes for FHA buyers. It's paired with a permanent buydown to 5.99%. After the first year, the payment rate moves to the permanent rate. The 6.742% APR is printed beside both rates.

A temporary buydown and a permanent buydown are paid for differently. A temporary buydown puts money into escrow to subsidize the early monthly payments. The VA explains it with a 2-1 plan: on a 5% note rate, the effective rate is 3% in year one, 4% in year two, and 5% from then on, once the subsidy runs out. A permanent buydown uses discount points paid at closing to lower the contract rate for the life of the loan. The Consumer Financial Protection Bureau describes points as a trade of upfront cost for a lower rate.

The APR is a third figure. The CFPB's explainer on APR versus interest rate says APR includes the interest rate plus points, broker fees and other loan charges. That's why it can sit well above the rate printed in large type. For conventional loans, the Fannie Mae Selling Guide requires the borrower to qualify at the note rate, not the subsidized first-year rate. It limits temporary buydowns to 3 percentage points at most, with no more than a 1-point step-up each year and a maximum of three years.

Hayden adds a "Settle In" program for FHA, VA and USDA buyers. It reduces the mortgage payment for up to six months and covers mortgage interest, property taxes and homeowners insurance. Buyers using other loan types get savings on select homes that can go toward the price, closing costs or design options. The offer requires contracts written September 16 through December 31, 2026, and the rate information is dated October 5, 2026.

Four communities, three builders, different ways to discount

Hayden's approach is only one of several. Across Pasco's newer subdivisions this fall, builders are delivering savings in noticeably different ways. Each line below reflects the builder's own published terms on the date shown, and several of these windows are short.

Two more offers show how quickly this changes. Pahlisch Homes advertised a "Golden Key" offer at Solstice, where homes start at $519,900. Buyers could choose a 5.25% rate or as little as $0 out of pocket toward the down payment for qualified buyers, paid through down payment assistance programs. A down payment is still required on the loan. The deadline was printed as October 12. Pro Made Homes offered up to $20,000 off select move-in-ready homes. The money could go toward settlement costs, discount points or a rate buydown, and the disclaimer limited the offer to August 24 through September 30, 2026.

The Dunes is the clearest example of a discount shown on the price itself. One home at 6026 Road 115 is listed at $449,995, marked down from $514,265. That's a $64,270 reduction, about 12.5% off the original price.

Why the size of a discount decides its form

This is the part that never appears on a builder flyer. Every buydown, closing-cost credit and payment subsidy a builder pays for counts as an interested-party contribution. Each loan program caps those contributions as a share of the price.

• FHA: Interested parties can contribute up to 6% of the sales price toward eligible closing costs, prepaids, discount points and specified buydowns. Anything above 6% is treated as an inducement to purchase. It reduces the price used to calculate the loan-to-value ratio, dollar for dollar.
• Conventional, under Fannie Mae: The cap is 3% when the loan-to-value ratio is above 90%, 6% between 75.01% and 90%, and 9% at 75% or less. It's 2% for investment properties. The math uses the lower of the sales price or the appraised value. Fannie Mae counts temporary and permanent buydowns toward these limits, and any excess is subtracted from the sales price before the loan-to-value ratio is recalculated.
• VA: Seller credits toward customary closing costs aren't capped. Seller concessions are capped at 4% of the home's reasonable value, and a buydown paid for by the builder or seller counts toward that 4%.

Run The Dunes markdown through those caps. Six percent of $449,995 is about $27,000, and 4% is about $18,000. A $64,270 concession couldn't be paid as an FHA or VA contribution without exceeding the limit. At that size, the discount has to appear as a lower price.

Spencer Estates shows how the down payment changes the picture. On a $924,900 home, a $47,000 incentive is just over 5% of the price. Under Fannie Mae's tiers, that's above the 3% cap for a loan above 90% loan-to-value but within the 6% cap between 75.01% and 90%. The same incentive can therefore fit or not fit, depending on how much the buyer puts down.

Taken together, the rules point to a pattern. Rate buydowns and credits work best for modest discounts on lower-priced homes. Large discounts tend to show up as markdowns. The comparison that holds up is the total cost of the house and loan, set against the caps that apply to the buyer's loan type.

The backdrop that makes builders this flexible

Builders are offering these incentives because the regional market has shifted. The Tri-City Association of Realtors' housing statistics dashboard covers the whole Tri-Cities area, including Pasco. In August 2026 it counted 1,303 active listings, the most since September 2013 and 14.7% more than in August 2025. Supply reached 3.8 months, up from 3.3 a year earlier, and the median days on market was 27. The median sold price for August 2026 was $428,900, down 2.5% from a year earlier. Even so, 2,520 homes had sold year to date, 6.6% more than the same period of 2025.

These are regional figures, not Pasco-only numbers, and September data hadn't been posted as of October 12. Still, the picture is clear. Buyers have more choice, and homes are still selling. New homes compete with a resale pool larger than the area has seen in about 13 years.

Nationally, the NAHB's September 2026 builder survey found that 66% of builders were using sales incentives and 38% were cutting prices, with an average cut of 6%. West Pasco's offers follow the same pattern. Incentives are more common than outright cuts, and the deepest discounts arrive as markdowns.

What makes two West Pasco offers comparable

New-construction offers in Pasco this fall can look similar and cost very different amounts. They line up once a few figures are on the page:

1. The note rate after any temporary buydown ends, and the year it ends
2. The APR on the loan estimate, which includes points and fees
3. Whether the specific home qualifies, since several offers apply only to "select homes"
4. The contract or closing deadline, measured against today's date
5. How much of the loan program's contribution cap the builder's incentive uses
6. For a markdown, the original price and the current price

With those figures, a markdown at The Dunes, a buydown at Madison Park North and a dollar incentive at Spencer Estates can be compared directly.

A few questions buyers ask

Does a temporary buydown lower the rate for the life of the loan? No. Under the VA's description, the subsidy covers the early payments, and the effective rate returns to the note rate once the escrowed funds run out.

Do these caps apply only to builders? They apply to interested parties in a sale, and the seller is one of those parties. So the same FHA, Fannie Mae and VA limits apply to concessions a resale seller pays.

Why is a 4.99% rate shown next to a 6.742% APR? APR includes points and other loan charges on top of the interest rate. A temporary first-year rate is a separate figure again.

If you're weighing a West Pasco new build against a resale, or you're selling a home that competes with these builder offers, Caroline Couture can help you put the numbers side by side and see what each one costs. If you're selling, start with a free home valuation, and we'll look at how your home measures up against the new-construction incentives buyers are seeing this fall.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.