What a Forward Commitment Is
A forward commitment is an agreement where the builder prepurchases a block of mortgage rates for future buyers. Because these rates are secured in advance, they are often significantly lower than the current market. Buyers can lock these rates once they're under contract, giving them a more affordable path to homeownership.
Why Forward Commitments Work
At the core of every home purchase, buyers seek predictability. A lower, fixed rate provides them with essential confidence, comfort, and affordability that is often missing in a fluctuating rate environment. For the builder, this translates directly into a major sales advantage: the forward commitment program helps you stand out from all competitors, successfully re-engage buyers who may have paused their search due to higher rates, and increase overall qualification rates by lowering prospective buyers' monthly payments. Furthermore, making these attractive rates available for a limited time creates a powerful sense of urgency, driving faster decisions and higher conversion.
Key Benefits
For Builders
Utilizing forward commitments provides numerous tactical advantages for builders looking to optimize their business operations and protect profitability. You gain greater control over your inventory and sales pace, ensuring a more stable and effective business rhythm.
Other benefits include:
- Preserve appraised values because costs are not listed as concessions
- Overcome concession limits tied to specific loan types
- Promote below-market monthly payments in advertising
For Buyers
For the end customer, forward commitments are a powerful tool for financial security. Buyers are able to secure a fixed, lower interest rate for the life of the loan, providing stability and peace of mind. This fixed lower rate directly increases their buying power, allowing them to qualify for higher price points and afford the home they truly want. They enjoy long-term payment predictability and gain exclusive access to rates they simply cannot find in the open market.
Variable-Cost Forward Commitment: The Smarter Strategic Solution
While some competitors offer a conventional Fixed-Cost Forward Commitment, where the builder's expense is locked alongside the buyer's rate, we specialize in the superior Variable-Cost Forward Commitment.
In the Fixed-Cost model, although budgeting is simple, the builder is locked into a set cost for the duration, resulting in a higher overall cost in many rate environments and eliminating the opportunity to capture savings if markets improve.
Our Variable-Cost Forward Commitment is designed to overcome these critical limitations. The buyer still receives the same guaranteed, locked, and predictable lower rate. However, the builder's cost to secure that rate is allowed to flex within a pre-agreed market range (for example, between 4% and 6% of the home price). This structure provides powerful protection for your bottom line.
Why Our Forward Commitments Stand Out
Flexible Block Sizes
Most lenders require large minimum blocks like $3–5 million.
We create smaller or customized blocks that match your inventory and buyer profile
Multiple Loan Types
Something most other lenders do not offer.
We can combine multiple loan types within a single program
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Frequently Asked Questions
How is the rate lower than the market rate?
The builder prepurchases the rate block at favorable terms, allowing those savings to be passed to buyers.
Can buyers refinance if rates drop?
Yes. They can refinance at any point in the future.
Do these programs work with other builder incentives?
Yes. Many builders layer them with upgrades, closing cost credits, or other incentives.
Do buyers need perfect credit?
No. Qualification depends on the loan program being used.
Does the program run out?
Yes. Once the allocated loan volume is used, the special rates end, creating urgency.
What is the core difference between Variable-Cost and Fixed-Cost Forward Commitments?
In both models, the buyer's interest rate is locked and fixed. The difference lies in the builder's cost.
Fixed-Cost: The builder's cost (the fee to secure the rate) is locked in immediately, regardless of future market movement.
Variable-Cost (Our Solution): The builder's cost is allowed to flex within a pre-agreed range. This flexibility ensures you only pay the minimum necessary to achieve the desired buyer rate, minimizing cost exposure.
Does the Variable-Cost commitment introduce risk for my buyers?
Absolutely not. The "variable" component only applies to the builder's internal cost management. The buyer's interest rate, payment, and loan terms are 100% fixed and guaranteed once they lock in the rate under the commitment program. Their certainty is identical to that of a Fixed-Cost commitment.