People are buying new homes for cheaper in Colorado Springs through new home builder incentives to bring the interest rate down. This gives them a lower monthly payment, with a new home.
For those looking at brand-new homes, this is a lesser-known advantage working in your favor right now—builder incentives that can significantly reduce your monthly payments or even your total cost of buying.
And before you ask, no, new build homes aren’t cheaper because of build quality, though yes the wood before the 90’s was more solid. It’s because the new construction companies paid their own preferred lender to offer lower interest rates for a certain number of their homes. This is called a builder incentive, and home builders offer a few types of incentives. This is a new build home in south Colorado Springs. The builder is Richmond American. Big lot!
Why Builders Are Offering Big Incentives Right Now
Over the past few years, homebuilders across the country (including here in Colorado Springs) have faced some unique challenges. In 2021 and 2022, demand was through the roof. Builders couldn’t keep up with the pace of buyers, and waitlists were common.
But by late 2023 and into 2024, the market changed. The Federal Reserve raised interest rates to curb inflation, which pushed mortgage rates to 7% or more. That dramatically reduced buyer demand. As fewer people qualified for loans—or were simply priced out—builders found themselves sitting on unsold inventory.
Rather than stop building (which they can’t easily do once projects are underway), many builders decided to offer financial incentives to make buying more attractive.
According to data from the National Association of Home Builders (NAHB), over 60% of builders were offering incentives by mid-2024, including rate buy-downs, closing cost coverage, and even price reductions (NAHB, 2024).
Out of the just over 3,000 homes that have sold in Colorado Springs in 2025 so far, 400 of those were new construction homes. In other words, new homes make up 13.3% of homes sales in Colorado Springs.
Plus, 585 new home permits have been issued so far this year. Compare that to the 1,416 new home permits for 2024, and 1,325 in 2023. Home builders continue to see demand for housing in Colorado Springs. I’ve talked with several of the local home builders, and they are all still doing gradual price increases as they finish building out their new neighborhoods.
What Kind of Incentives Are Being Offered in Colorado Springs?
Here are the most common incentives you’ll find among builders in Colorado Springs right now:
1. Interest Rate Buy-Downs
This is one of the most popular strategies in 2024 and 2025. Builders will partner with a preferred lender to offer you a lower interest rate, either temporarily or permanently.
- Temporary Buy-Down (e.g., 3-2-1 or 2-1 Buy-Down): Your interest rate starts low in year one (e.g., 2.99%) and increases gradually over the next few years until it reaches the full rate (e.g., 4.99%).
- Permanent Buy-Down: The builder pays a lump sum at closing to permanently reduce your interest rate. For example, instead of a 7% loan, you may get a 4.99% rate.
Both options can lower your monthly mortgage payment by hundreds of dollars per month, especially in the early years of the loan.
2. Closing Cost Credits
Many builders will offer $5,000 to $45,000 in closing cost assistance—often enough to cover most (if not all) of your out-of-pocket expenses at closing.
This is especially helpful for buyers who have the income to qualify for a mortgage but are short on cash for the upfront costs.
3. Upgrades or Lot Premium Credits
Instead of reducing the price, some builders offer “design center credits” or will waive lot premiums (which can range from $10,000 to $40,000 depending on location). This means you can get a better home or better features for the same price.
4. Price Reductions
Although builders are often hesitant to drop prices outright (it affects their appraisals and future sales), some are quietly reducing base prices or offering “quick move-in discounts” on inventory homes they’re eager to sell before the next fiscal quarter. You can also use any builder incentives given to you to either reduce the purchase price, further reduce the interest rate, or cover more closing costs.
Example:
Let’s say you’re buying a $600,000 new home. With a traditional 7% mortgage and 10% down, your principal and interest payment is roughly $3,600/month.
If the builder offers a permanent rate buy-down to 5.75%, your payment drops to about $3,150/month—a savings of $450/month or $5,400/year.
If your interest rate is 4.99%, your payment drops further to $2,896 a month, which saves you $704 per month, or $8,448 per year.
Over just the first five years, that’s more than $27,000 to $42,240 saved.
Why These Incentives Work in Your Favor
If you’ve been on the fence about buying a home, especially with mortgage rates hovering around 7%, builder incentives can shift the equation in your favor in several key ways, not just in lower monthly payments.
There is more predictability in your monthly payment. A fixed cost with a lower interest rate on a new build home is better than waiting for interest rates to maybe drop. Plus if interest rates do suddenly drop, you can refinance into that lower rate!
You can also get more home for your money. Builder credits allow you to get upgraded flooring, countertops, appliances, or larger lot sizes—without increasing your loan amount. It’s a way to stretch your budget further. Just make sure the builder isn’t inflating the purchase price to make it seem like you’re getting a good deal from the incentives.
What’s the Catch? (And How to Shop Smart)
Builder incentives are real—but like all things in real estate, the details matter. Here are a few tips to help you shop wisely:
1. Always Compare Lender Options
Builders often offer incentives only if you use their preferred lender. While this can be a great deal, it’s important to compare their rate and closing costs with an outside lender to ensure you’re getting a fair offer.
Even if the builder covers some of your costs, they may bake higher fees or less favorable terms into the loan. Generally though the builder’s preferred lender can offer better terms for you than an outside lender can.
2. Beware of Inflated Base Prices
Some builders increase the “base price” of the home to make the incentive look better. Make sure you’re comparing total value—not just the incentive number. A lower monthly payment is great, but only if the purchase price and interest rate are competitive.
3. Negotiate Smartly
Even though builders are offering pre-set packages, there’s usually still room to negotiate, especially on move-in ready homes. Ask about:
- Extra design upgrades
- Additional rate buydown help
- Lower Earnest Money amount
- HOA fee credits
- Flexible closing timelines
The more inventory they have, the more flexible they tend to be.
Who Benefits Most From These Incentives?
You may benefit significantly from these builder deals if you:
- Plan to stay in the home for 3–7 years: A temporary buy-down works best if you plan to refinance later or move before the higher rate kicks in.
- Have limited upfront cash: Closing cost credits reduce your out-of-pocket expenses.
- Want to avoid bidding wars: Many resale homes in Colorado Springs that are move-in ready still receive multiple offers. Builders, by contrast, are more predictable and offer structured, first-come-first-serve pricing.
- Prefer lower stress and cleaner transactions: New builds often come with warranties and fewer inspection surprises.
If you’re an introvert or someone who likes clarity and structure, buying a new home can feel much calmer and more straightforward than negotiating a resale home.
What About Waiting for Rates to Drop?
This is one of the biggest questions I have heard from clients and maybe home buyers: “Should I wait until interest rates drop?”
It’s a fair question—but it’s worth considering the following:
- Rates might not drop quickly: While the Fed may lower rates gradually over 2025–2026, there’s no guarantee they’ll go back to 3% or 4% anytime soon.
- Home prices could rise again: Once rates do drop, buyer demand will increase, which may drive prices back up—especially in high-demand areas like Colorado Springs.
- Builder incentives may go away: These offers exist because demand is slower. If the market heats up, builders won’t need to offer them anymore.
- Political unrest: Yeah, that could maybe drop the rates.
So while waiting might save you a little on interest in the future, you may lose out on thousands in today’s incentives—especially if prices climb again.
Can Be A Smart Time to Buy (If You’re Informed)
If you’re in the market for new homes in Colorado Springs and you’ve been hesitant due to interest rates, it’s worth taking a serious look at new construction. The incentives available in 2025 are some of the best we’ve seen in years.
By working with a builder’s preferred lender and your own trusted real estate agent, you could get thousands in savings and get the home that has what you really want without having to wait for a remodeled existing home.
I recommend talking through your goals with a professional who understands both your budget and your lifestyle. Whether you’re just starting to look or ready to buy, I’d be happy to walk you through your builder options, locations and neighborhoods, builder reputation, warranty issues, inspecting your new home, the builder contracts, negotiating, and more.
To view new homes in Colorado Springs, this is a handy new homes search for Colorado Springs. Should you want to tour any, let me know and I’ll go with you! Builders like having people’s real estate agent with them even when they first browse models!