Here’s something new I haven’t seen this cycle.
A home builder is offering to cover your first 12 mortgage payments if you purchase one their homes.
This goes beyond those big mortgage rate buydowns we’ve seen where you can get a temporary interest rate of 0.99% the first year.
The promotion is intended to ease the burden of homeownership, which has gotten increasingly expensive over the years thanks to surging mortgage rates.
Coupled with a higher cost of living across the board, it has made home purchases hard to pencil these days.
No Mortgage Payments for 12 Months When You Buy a New Home
The home builder in question is Mattamy Homes, which refers to itself as the “largest family-owned homebuilder in North America.”
They’re actually headquartered in Calgary, Alberta (Canada) and like the United States, the housing market has been tough up north as well.
The same affordability constraints have made it difficult to move inventory, leading to all sorts of creative incentives to sell homes.
As we know, home builders are “motivated sellers” because they don’t have a choice but to sell their homes.
As such, they’re coming up with some interesting ways to unload, the most common this cycle being the mortgage rate buydown.
We’ve seen both temporary and permanent mortgage buydowns, sometimes combined to really juice an offer.
I recall a lender offering a first-year rate as low as 0.99%, before it eventually increased to a still well-below-market rate of 3.99% for the remainder of the 30-year loan term.
But Mattamy Homes appears to be going a step further by covering all mortgage payments for the first 12 months during a “limited-time campaign.”
And they’re doing this on all single-family homes, semi-detached homes, rear-lane townhomes, and village homes with a maximum monthly payment of $4,150.
That’s a pretty expensive incentive, if we consider it’s about $50,000 ($49,800) over 12 months.
Still Have to Look at the Big Picture
Whenever I see deals like this, I tell people to look at the big picture.
If you get a “deal” in one area, you have to factor in the price you’re paying elsewhere.
In other words, home much are you paying to buy the home in order to secure no payments for the first 12 months?
Same goes for those big mortgage rate buydowns here in the U.S. The builder is offering you a 30-year fixed set at 4.99% for the life of the loan. Great!
But what is the tradeoff? How much does the home cost? Are you perhaps paying more because they’re giving you the interest rate discount?
Would you pay that much for the property if you weren’t getting the mortgage rate deal?
There is no free lunch. So the cost is being baked in somewhere along the way, often via a higher sales price, all else equal.
You might be fine with it assuming it can make payments affordable over the course of your tenure in the property, but be sure to recognize this before you proceed.
The builder says its “First Year Mortgage, On Us” campaign was designed to give home buyers “peace of mind during their first year.”
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.