Lenders weigh in on how to use $20k in closing cost assistance

If you’re wondering if the extra incentives that have become increasingly popular in our region truly make a difference – you’ll want to lean into this post. Blackrock Homes is currently offering $20,000 to be applied to any lender-approved closing costs and/or prepaids, including HOA dues, etc. This incentive is currently offered on our complete or nearly complete model homes. Many builders are offering these incentives to help offset the higher interest rates and the impact they have on monthly mortgage payments.

At a glance, it’s as if the home price is discounted $20,000 – and in essence that’s true. However, by applying these funds to the finance side of things, a mortgage payment can feel much more doable. 

We asked several leading lenders in our valley to share their insights on how they would guide a borrower in how to use this substantial sum of money. Here are their thoughts:

Kellie Allen and Tia Elson with Legacy Lending Team:

There are a couple of options to utilize $20k towards closing costs. 

  1. Permanent rate buydown—use the $20k to permanently buy down the interest rate for the life of the loan. This will save you substantial money on your monthly payment. The cost for a permanent rate buy down differs daily just as interest rates differ daily.  If there are extra funds left over after the rate buydown, you can apply this towards standard closing costs such as: title fees, appraisal fees, etc. Including prepaid fees like your homeowners insurance premium and your escrow account set up for property taxes & homeowners insurance.  You could also use the extra funds to pay for mortgage insurance upfront (if you’re not doing a 20% down payment), which would again lower your monthly payment. This option makes the most sense if you see yourself in this home for a longer amount of time to get the most out of the funds. 
  2. Temporary rate buydown—use some of the $20k to buy down the rate down using a 2/1 rate buydown. This buys down the interest rate by 2% the first year and 1% the second year, to ease into your permanent mortgage payment. On the third year, you will be at your original interest rate. This option likely won’t use up the entire $20k of funds so again, you can use the remaining funds to pay for other standard closing costs or pay for the mortgage insurance upfront.  

To learn more about Kellie and Tia’s suggestions and loan products, feel free to reach out to either one of them directly:

KELLIE ALLENArea ManagerNMLS #92930
Cell: (208) 941-4914 | Email: kallen@s1l.com | Fax: (208) 545-3788
2025 E. Riverside Dr., Suite 240, Eagle, ID 83616

TIA ELSONLoan OfficerNMLS #1204551
Cell: (208) 841-4878 | Email: tmatthews@s1l.com | Fax: (208) 545-3788
2025 E. Riverside Dr., Suite 240, Eagle, ID 83616





Jason Ames with Homebridge:

A great way to use the $20,000 closing cost credit from a builder to a prospective buyer would be to apply approximately $5,000 towards traditional closing costs such as; lender origination or document preparation fees, appraisal, title and escrow costs, HOA set up fees and pay their prepaid items. This would include prepaid interest, 1st year homeowner’s insurance and set up their escrow account for taxes and insurance. I believe the best use of the remaining funds would be to buy the interest rate down to a much lower fixed rate on a 30 yr. loan.

For example, on a loan amount of $450,000. A buyer could buy their rate down by 1% -1.25% which would lower their monthly principal and interest payment by $357 a month, which is a significant savings. Compare this to just sales price reduction of $20,000. And the monthly principal & interest payment with the rate buydown would still be lower than the sale price reduction at current rate by approximately $245 a month.

To learn more about Jason’s suggestions and loan products, feel free to reach out to him directly:

JASON AMESArea Manager – ProducingNMLS #369319
Homebridge Financial Services, Inc.
775 S. Rivershore Lane, Suite 220, 200
Eagle, ID 83616
c: 208-869-4222  f: 208-319-9749 
e: jason.ames@homebridge.com
web: www.Homebridge.com/JasonAmes

To make the dream of homeownership a reality for every customer, every day.


In any of the above scenarios, if there’s funds remaining after the lender has applied all that they can with the $20k assistance, a check will be issued to the buyer at closing. This way, the buyer will get the full benefit of the $20,000, dollar for dollar.

With this promotion, a buyer with an accepted All Cash offer can expect to receive a $20,000 check at closing, instead of taking a price reduction. Builders generally prefer this structure to preserve the value of the homes sold within the neighborhood.

If homeownership in Edington is your goal before year-end, there’s excellent resources only a phone call way. We invite you to learn more today – our team is here to help you.

We appreciate you taking the time to read this post – thank you!

About the Home Builder

Blackrock Homes

Blackrock Homes is based in Meridian, Idaho, and has been a top residential builder in Boise Valley for over two decades. They have a long-standing reputation for building quality homes of excellent value and delivering superior customer service.

Posted by:

Angie Dilmore

Real estate drew Angie in twelve years ago, when she decided to make a career shift that would bring new and exciting challenges each day. Though the industry is ever-changing, Angie strives to deliver a high level of customer care and takes pride in making real estate transactions a positive experience. You can contact Angie at 208.250.2774 or angie@inboisevalley.com.

Angie is a community specialist at Edington and East Ridge Village, and is licensed under Amherst Madison in Eagle, Idaho.