What’s the difference between first-time home buyer rebates and commission rebates?

First-time home buyer rebates are offered by the state or federal government to help people purchase their first property while realtor commission rebates are offered as a buying incentive from the realtor. The Housing and Economic Recovery Act created a federal tax credit of $7,500 for first-time home buyers, but this benefit expired in 2010. Now, you’ll need to look a little harder to find a tax credit, grant, or other assistance for your first home purchase. Some options include no-penalty IRA withdrawals, grants from the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA) loans, and state-sponsored programs for first-time buyers. You can check with your state’s housing finance agency to see what’s available where you live.

How can a commission rebate help me buy a bigger home?

Since commission rebates are usually closing credits, a buyer’s rebate can increase your purchasing power. But the exact impact will depend on the type of rebate. Commission rebates can be applied toward closing costs but are subject to lender restrictions depending on your loan type. Cash back rebates come after closing, so you can’t use them toward closing costs. But the benefit of a cash back rebate is that you can spend the money on whatever you want, whether that’s replenishing your savings account or putting new carpet in your living room. Use our home buyer rebate calculator to see how much you can plan on saving with your home purchase.

Why do agents offer commission buyer rebates?

Realtors offer home buyer rebates to win and retain your business. Offering a rebate after closing can be a good way for agents to encourage home shoppers to close with them. Home buyer rebates also help agents remain competitive amid the growing number of companies that have built-in buyer rebates. Additionally, if home buyer demand in their area is waning due to surging mortgage rates and higher borrowing costs, agents may offer a rebate to compete for a dwindling number of home shoppers.

Daniel Bortz

Contributing Writer

Daniel Bortz is a freelance writer for The New York Times, The Washington Post, Money Magazine, Consumer Reports, and other publications. He is also a licensed real estate agent in Northern Virginia, where he's been selling homes for almost a decade.

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