Two buyers can sign on the same new home in the Waco area with the same builder promotion and walk away with very different amounts of help. The builder doesn't decide that gap. Federal loan rules cap how much any seller or builder can contribute, and the cap depends on the loan program, the down payment and the appraisal. At a little over $300,000, an advertised "up to $20,000" can lose more than half its value on a conventional loan with less than 10% down. A low advertised rate can be an adjustable loan that resets after year five.
New-construction shoppers around Waco this October are seeing both kinds of offer.
The $20,000 that becomes about $9,400
Stylecraft Builders currently lets buyers pick one of two offers on qualifying homes. One is a builder-paid starting rate of 4.49%, which the builder describes as a limited-time, first-come offer. The other is up to $20,000 to use toward the purchase. The qualifying list includes homes in Liberty Oaks in Waco and Adaline Crossing in McGregor.
The builder's fine print says its incentives can't exceed "seller concession limits." Those limits come from the agencies that back the loan, and they are percentages of the price:
- FHA: Interested parties, including builders, can contribute up to 6% of the sales price under HUD Handbook 4000.1. Permanent and temporary rate buydowns count toward that 6%.
- Conventional (Fannie Mae): The Fannie Mae Selling Guide allows 3% when the loan is more than 90% of the value, 6% from 75.01% to 90%, and 9% at 75% or less, for a primary residence.
- VA: The VA Buyer's Guide says seller concessions can't exceed 4% of the sale.
- USDA: USDA's guaranteed loan handbook limits seller and other interested-party contributions to 6% of the sales price, and the money has to go toward an eligible loan purpose.
Here's how those caps apply to a real local price. One quick move-in home on Adaline Bend in McGregor is listed at $312,900. The table uses that price only to show the arithmetic. It doesn't say whether that particular home qualifies for any offer.
| Loan scenario at a $312,900 price | Contribution cap | Most a builder could contribute |
|---|---|---|
| Conventional, under 10% down | 3% | about $9,387 |
| VA | 4% | about $12,516 |
| FHA or USDA | 6% | about $18,774 |
| Conventional, 10% to just under 25% down | 6% | about $18,774 |
| Conventional, 25% or more down | 9% | about $28,161 |
On this home, only the buyer putting a quarter or more down has room for the full $20,000. A first-time buyer using a low-down conventional loan, which is a common setup, hits the ceiling at roughly 47% of the advertised figure. Even FHA and USDA, at 6%, fall short of $20,000 at this price.
Why the appraisal sets the ceiling, not the contract
Fannie Mae figures its caps on "the lower of the sales price or appraised value," not on the loan amount. If the appraisal comes in below the contract price, the percentage applies to the smaller number and the dollar cap drops with it.
Fannie's guide adds a second limit. Financing concessions can't exceed the buyer's actual closing costs, and any amount above the cap or above those costs is treated as a sales concession. A sales concession gets subtracted from the price, and the loan-to-value ratio is recalculated on the lower number. HUD handles it the same basic way on FHA loans: anything above actual costs or above 6% counts as an inducement to purchase.
So a flex-cash offer works in practice as "up to $20,000, or your cap, or your closing costs, whichever is smallest." Most Waco buyers will be limited by the first or second of those, not by the builder's number.
What the 4.49% rate actually is
The rate offer has its own fine print, and it's printed right on the builder's page. As of September 29, 2026, the 4.49% is the starting rate on a 5/1 adjustable-rate mortgage, shown next to an APR of 6.879%. The terms:
- The rate stays fixed for five years. Starting in year six, it can adjust every year by up to 1%, with a 5% lifetime cap on increases. That means the rate could eventually reach 9.49%.
- The loan has to close by November 30, 2026, the home has to be the buyer's primary residence, and the loan has to go through Kangaroo Home Lending to get the incentive.
- The pricing assumes a credit score of at least 680 and a debt-to-income ratio no higher than 50%. Lower scores or higher ratios bring higher pricing.
- The builder's example uses a $320,208 price with an FHA loan at 3.5% down. That's a $314,417 loan including the upfront mortgage insurance premium, with a first-period payment of $1,591. That payment leaves out taxes, insurance and monthly mortgage insurance.
- You can't combine it with other offers, so choosing the rate means giving up the flex money.
A buydown also uses up the same contribution allowance. On that $320,208 FHA example, the 6% limit works out to about $19,212, and HUD counts buydown costs inside it. Any room left over for closing costs is whatever the buydown doesn't use.
Why builders are offering this much right now
Waco has more homes for sale than buyers are absorbing quickly. The Texas Real Estate Research Center at Texas A&M reports that in August 2026 the Waco metro had 5.57 months of inventory and 1,452 active listings, with 277 sales and a median price of $285,237. In August 2025, the same dataset showed 6.04 months of inventory, 1,511 active listings and a $285,000 median. Prices are flat year over year, and supply is still well above what a tight market looks like.
Homes are also sitting longer. Median days on market for the Waco metro rose from 72 in August 2026 to 78 in September 2026, according to FRED. The Waco Tribune-Herald reported that resale homes in McLennan County sold for an average of $328,535 in August 2026, which is 97.3% of the average asking price, after an average of 71 days on market. In the city of Waco alone, the August median sold price was $275,000, with 668 active listings.
Builders are competing with that resale stock, and more of their own is coming. KWTX reported on July 23, 2026 that Waco officials counted 25 planned subdivisions and more than 5,000 single-family units in development, with growth along Highway 84 toward McGregor and Woodway, in west Waco, and in China Spring. Nationally, NAHB's September 2026 builder survey found that 66% of builders were using sales incentives and 38% had cut prices, with an average cut of 6%.
The local median also leaves out part of the new-home market. Texas A&M's figures cover homes sold through the MLS and exclude builder sales negotiated outside it. That $285,237 median doesn't capture many of the incentive-driven deals in new subdivisions.
Price cuts and incentives aren't the same thing
Some local builders are lowering prices outright. That Adaline Bend home was reduced from $347,900 to $312,900, a $35,000 cut. At D.R. Horton's Eagles Landing in China Spring, about 12 miles from downtown Waco, a "Big home savings end November 1" promotion includes 10113 Neptune Court, marked down from $267,215 to $258,715.
A lower price works differently from a credit. It reduces the purchase price and the loan amount directly, and it doesn't count against the financing-concession limits, which only cover contributions toward closing costs and similar items. A price cut also lowers the base those percentage caps are calculated from, so it slightly reduces how much credit a builder can add on top of it.
To compare offers on two new homes, or a new home against a resale, these questions turn advertised numbers into dollars you can use:
- What contribution cap applies to my loan program and down payment at this price?
- What are my actual closing costs, since the credit can't go above them?
- If I choose the rate offer, how much of my cap does the buydown use?
- What does my payment look like in year six if the ARM adjusts?
- Does the closing deadline, like November 30, 2026, fit a realistic timeline for this home?
A short FAQ
Can a builder give me cash back at closing beyond my costs? Under Fannie Mae's rules, financing concessions above the buyer's closing costs are treated as sales concessions and subtracted from the price. HUD treats amounts above actual costs as an inducement to purchase.
Do I have to use the builder's lender? Stylecraft's disclosure says buyers aren't required to use Kangaroo Home Lending to buy the home, but they do have to use it to qualify for the builder's incentives.
Does the promotional rate work with FHA or VA loans? The disclosure says the promotion is available with FHA and VA financing. The contribution caps for those programs still apply.
Will these offers still be there next month? The builder says its offers may change without notice, and both deadlines mentioned here fall in November. Treat every figure in this post as an early-October 2026 snapshot.
If you're comparing a new-build incentive with a resale home around Waco, McGregor or China Spring, the team at WestLand Realty Group can help you figure out what an offer is actually worth for your loan and your timeline before you sign. Contact Our WestLand Experts.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
