The low rate is the headline on one builder's ad around Panama City last week. Below it, in smaller type, the rest of the deal reads: "FHA 5/1 ARM," "minimum credit score of 680," "owner occupancy requirements," and "offer requires financing through seller's affiliate." A buyer from Atlanta or Nashville shopping for a beach house to rent part of the year would qualify for almost none of it.
That's the thing to understand about new-construction incentives this fall. The rates builders advertise are adjustable teaser rates, and most of them are built for people who will live in the home full time. If you're buying a second home or an investment property, the lending rules either cut the incentive down or rule you out. For you, the useful comparison against resale is the price, not the rate.
What's on offer right now, and the fine print
Two current offers from builders active in the Panama City area show the pattern.
| Fischer Homes, Breakfast Point East, PCB | Lennar, greater Panama City | |
|---|---|---|
| Advertised rate | 5.00% | 4.750% |
| APR printed beside it | 6.415% | 7.836% |
| Loan type | Conventional 30-year ARM | FHA 5/1 ARM |
| After year five | Adjusts every 6 months, SOFR index plus 3.00% margin, subject to caps | Adjusts once a year based on index changes |
| Down payment / credit | 10% down, 720 score | 3.5% down, 680 score |
| Lender | Victory Mortgage, LLC | Lennar Mortgage, LLC, required for the offer |
| Deadline | Headline says close by Nov. 30, 2026; fine print says 12/31/2026 | Sign Oct. 19–25, close by Nov. 25, 2026 |
Lennar's signing window closed on Sunday, Oct. 25. That's typical: these offers change week to week, and the next one may have different numbers but will probably have similar conditions. Its featured homes were in Southport and Panama City, including Magnolia Ridge and Riverbend Run, not on the beach side. Fischer's offer applies to select quick move-in homes, and its Breakfast Point East listings include a home on Sheephead Bayou Drive at $669,995. If you're working toward Fischer's deadline, get the closing date in writing. The headline and the legal terms give two different dates.
The second number is the one to read
On both offers, the APR is well above the advertised rate. Lennar's gap is just over three percentage points.
The CFPB explains that APR folds in points, fees and other charges, so it usually runs above the note rate. The same page warns that an ARM's APR does not show the loan's maximum rate, and it advises against comparing ARMs on APR alone. So a 7.836% APR is a reminder of what the loan may cost over its life, and it doesn't cap what you could pay.
Once the fixed period ends, the rate becomes index plus margin, within the loan's caps. The CFPB's consumer handbook on ARMs adds that a teaser rate can sit below that fully indexed rate. When that's the case, your payment can go up at the first adjustment even if the index hasn't moved at all. The caps themselves vary by contract, and the CFPB points to the Adjustable Interest Rate table on your Loan Estimate as the place to find your loan's caps and maximum.
For an owner-occupant planning to stay ten years, that's the real tradeoff. Five years of a lower payment comes with an open question about year six. Many second-home and investment buyers never get far enough to face that tradeoff.
The occupancy line removes the FHA deal entirely
FHA financing has an occupancy test. Under the heading "FHA Requirement for Owner Occupancy," HUD Handbook 4000.1 says:
"At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year."
A beach condo or rental house you visit a few weekends a year doesn't meet that test. The FHA version of a builder deal is simply unavailable to you, no matter how the monthly payment in the ad compares with resale.
The Fischer offer is conventional, so it isn't automatically off the table for a second home. That leads to the rule that matters most for the buyers we work with.
The cap that shrinks an investor's incentive
Conventional loans sold to Fannie Mae follow its limits on "interested party contributions." The Fannie Mae Selling Guide, section B3-4.1-02, counts the seller, the builder or developer, and their affiliates as interested parties. It caps what they can put toward your financing like this:
| Occupancy | LTV/CLTV | Maximum financing concessions |
|---|---|---|
| Principal residence or second home | Over 90% | 3% |
| Principal residence or second home | 75.01%–90% | 6% |
| Principal residence or second home | 75% or less | 9% |
| Investment property | Any | 2% |
The percentage is based on the lower of the sales price or the appraised value, not the loan amount. Anything above the cap is treated as a sales concession and deducted from the price, and the LTV is recalculated. Concessions also can't exceed your actual closing costs. If a builder or its affiliated lender pays for a temporary or permanent rate buydown, that cost counts toward the cap.
Here's what that means in dollars. An investor buying a $400,000 new build with a conventional loan can receive at most $8,000 in builder financing help. That covers part of a buydown or part of closing costs, not both at full strength, and it's about half the "up to $15,000" headline on last week's Lennar ad. A second-home buyer gets the same caps as an owner-occupant, but any buydown spending still comes out of that same capped amount.
Where the builder's flexibility actually shows up
When the rate offer is built for someone else, a second-home or investment buyer is left mostly with price to work with.
Builders are under real pressure right now. The National Association of Home Builders reported on Oct. 19, 2026 that its builder confidence index fell to 29 in October, the lowest since June 2012. In that survey, 43% of builders cut prices, the highest share in the 2020–2026 period, with an average cut of 6%. Sixty-five percent used sales incentives, the 19th straight month at 60% or higher. NAHB's chairman also said mortgage rates "have climbed well above 7% in recent weeks." Lennar's third-quarter 2026 results put its incentives at about 12.0%, with its average delivered price at $372,000, down from $383,000 a year earlier.
Builders tend to favor incentives over price cuts, and the price cuts on Panama City Beach listings this month look small. D.R. Horton's Red Tag event runs Oct. 9 through Nov. 1. At its Colonial East community in Panama City Beach, one home marked with the event banner on Robinson Bluff Road is listed at $467,181, down from $471,900. That's a cut of $4,719, about 1%. The national average reported by NAHB is 6%.
The resale market isn't putting pressure on builders either. In August 2026, the Panama City metro, which covers Bay and Gulf counties, closed 417 single-family sales, up 2.2% from a year earlier, at a median of $365,000, up 0.6%, according to Florida Realtors. With prices holding steady, an investor who can't use the financing incentive has no reason to accept the builder's list price as fixed. For you, the incentive dollars you can't use are the room to negotiate.
What to ask for before you sign
- The occupancy terms on the specific offer. Ask before you fall for a floor plan whether second homes or investment properties qualify at all.
- A Loan Estimate, not a flyer. Look at the Adjustable Interest Rate table for the first adjustment cap, later caps and the lifetime maximum.
- The incentive in writing, in dollars. Then ask the lender how much of it fits under the contribution cap for your occupancy type and down payment.
- A price reduction to replace the incentive you can't use. This matters most if you're buying as an investor.
- A competing quote from an outside lender. Federal rules at 12 CFR 1024.15 require builders to disclose affiliated lending relationships and generally bar them from requiring you to use a particular provider. Lennar's own fine print says using Lennar Mortgage is not required to buy the home, though it is required for the promotion.
- Any builder fee. Lennar's terms note that prices exclude closing costs and other fees, "including a builder fee, if applicable." Ask whether one applies to your contract.
FAQ
Can I take the FHA builder rate and rent the house out later? FHA requires at least one borrower to move in within 60 days and intend to keep living there for at least a year. Read the HUD Handbook language linked above and talk to your lender about your actual plans before you sign.
Does a second home get the same builder credit as a primary home? Under Fannie Mae's table, second homes and principal residences share the same 3%, 6% and 9% caps by loan-to-value. Investment properties are limited to 2%.
Is the APR the most I'll ever pay on these ARMs? No. The CFPB says an ARM's APR does not show its maximum rate. The caps on your Loan Estimate do.
This post is general information, not legal, tax or financial advice. Confirm your own loan terms, occupancy plans and contract details with your lender, attorney or tax professional.
If a builder offer has the rate highlighted and the occupancy line in fine print, send it to us. Sean Casilli and The Real Experts Group will go through what you qualify for, what you don't, and what price makes sense for you. Let's talk about your buying, selling, or investing goals.
