ARLINGTON, Texas–The nation’s largest homebuilder, D.R. Horton, said it is doubling down on mortgage rate buydowns in order to keep its sales volumes up as affordability remains a huge issue.
During an Oct. 28 earnings call, the company said 73% of its homebuyers in fiscal Q4 2025 received a mortgage rate buydown—up slightly from 72% in the previous quarter.
“As we anticipated on our last call, we did expect to lean in more heavily to the offering of 3.99% [mortgage rate buydown],” SVP-Communications and Head of Investor Relations Jessica Hansen said in a statement. “That is something that we’ve been doing, and we saw the mortgage rate in our backlog come down. It’s actually below 5% today, coming into this quarter.”
The Decisive Factor
For D.R. Horton’s buyers—many of whom are first-time homeowners—the monthly payment remains the decisive factor, Fast Company reported.
“The most attractive monthly payment we can put them in is with a lower rate,” CEO Paul Romanowski told Fast Company. “It’s a benefit to the homeowner over time in terms of paying down more of their principal.”
But Fast Company noted the strategy has come at a cost: incentive spending—including mortgage rate buydowns. The company’s gross margin on home sales fell to 20% in Q4 2025, down from 23.6% in Q4 2024 and well below the 26.9% in Q4 2021.
Margin Compression
Increased incentive spending accounted for 61% of D.R. Horton’s recent margin compression in Q4, while higher litigation costs made up another 33%, according to the company.
The incentives appear to be working. Fast Company noted net new orders rose 5% year over year in Q4, to 20,078—up from 19,035 a year earlier—demonstrating D.R. Horton’s ability to maintain sales momentum despite affordability headwinds.
