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Smart Financing Strategies Every LA Homeowner Should Know in 2025

  • 19 August 2025
  • Munif Ali
Real Estate Financing Strategies

Buying real estate in Los Angeles has never been easy, and in 2025, the challenges have only grown. With sky-high property prices and elevated mortgage rates, many LA homeowners and aspiring buyers struggle to realize their homeownership dreams.

 

But there’s hope. As the market evolves, so do the solutions. Today’s buyers are getting creative and smart by exploring real estate financing strategies that help them gain an edge. Three options gaining traction in LA are seller buy-downs, adjustable-rate mortgages (ARMs), and co-buying. These alternative methods can make buying real estate in Los Angeles more attainable than you might think.

Seller Buy-Downs

A seller buy-down is a real estate financing strategy in which the seller pays an upfront fee to reduce the buyer’s mortgage interest rate, resulting in lower monthly payments. This approach can make homeownership more affordable without requiring the seller to lower the sale price.

In the first quarter of 2025, 44.4% of U.S. home-sale transactions included seller concessions, such as mortgage-rate buydowns, marking an increase from 39.3% a year earlier and approaching the record high of 45.1% set in early 2023. Notably, 56.1% of LA homeowners involved seller concessions during this period, reflecting an 11 percentage point increase from the previous year.

This trend indicates a shift in buying real estate in Los Angeles, where elevated home prices, high mortgage rates, and increased housing supply have given LA homeowners more negotiating power. Sellers increasingly offer concessions to attract buyers and facilitate sales in a competitive environment.

Benefits of Seller Buy-Downs:

  • For Buyers – Lower monthly mortgage payments without the need for a reduced sale price.
  • For Sellers – Ability to close deals more quickly without compromising the listing price.

Before engaging, buyers should assess whether the immediate reduction in monthly payments justifies any potential upfront costs associated with the buy-down. You should also acquire professional guidance from experienced real estate agents and mortgage professionals to negotiate favorable terms and understand the implications of a seller buy-down.

Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage (ARM) is a home loan with an interest rate that adjusts periodically after an initial fixed-rate period. This structure can offer lower initial payments than fixed-rate mortgages, making it an attractive option for certain buyers.

As of April 30, 2025, the average rate on a 5-year ARM is 7.35%. In contrast, the average rate for a 30-year fixed-rate mortgage is 6.715%. The appeal of ARMs lies in their lower initial interest rates. For instance, some ARMs offer initial fixed rates closer to 6%, providing significant savings in the loan’s early years.

Benefits of ARMs:

  • Lower Initial Interest Rates – You’ll start paying lower rates during the initial monthly periods.
  • Potential Savings – If you plan to move or refinance before the adjustable period begins, you can capitalize on the lower initial rates without facing future adjustments.

However, you need to consider that after the initial fixed period, your interest rate and consequently, your monthly payment, can increase. Assess your risk tolerance to see if it aligns with your financial goals and plans for buying real estate in Los Angeles.

Co-Buying

Co-buying, or purchasing a home with friends, family, or partners, is rapidly emerging as a practical solution for overcoming Los Angeles’s high housing costs. By sharing expenses and responsibilities, LA homeowners can access properties that might otherwise be out of reach.

In 2025, over 61 million Americans will co-own a home with someone other than their spouse, accounting for nearly 20% of the population. Gen Z is at the forefront of this movement. According to the NextGen Homebuyer Report, 32% of Gen Z homebuyers consider co-buying with friends or family, compared to 18% of Millennials. This trend underscores a generational shift toward collaborative real estate financing strategies.

Benefits of Co-Buying:

  • High Purchasing Power – Combining incomes allows LA homeowners to afford better properties or homes in more desirable neighborhoods.
  • Shared Financial Responsibility – Costs such as down payments, mortgage payments, and maintenance expenses are divided among co-owners, reducing individual financial burdens.

This option has the potential for conflicts. Co-buying requires clear communication and agreements to manage differing expectations and responsibilities. Formal agreements outlining ownership shares, decision-making processes, and exit real estate financing strategies are essential to protect all parties.

Conclusion

Traditional financing isn’t your only option to homeownership. As an LA homeowner or hopeful buyer, exploring real estate financing strategies like seller buy-downs, ARMs, and co-buying could be the key to securing your dream home. 

Let Pacific Playa Realty be your guide in buying real estate in Los Angeles. Our experienced team is well-versed in evolving financing options and works closely with you to identify the right solution based on your budget, timeline, and goals. 

We make sure your home is within reach, no matter the market. Contact us today.

Key Takeaways

  1. Negotiating a seller-paid interest rate reduction can make homes more affordable without decreasing the sale price.​
  2. Adjustable-rate mortgages provide lower starting interest rates, benefiting buyers planning short-term ownership or anticipating future refinancing.​
  3. Pooling resources with others can open doors to homeownership, but requires clear agreements to manage responsibilities and potential conflicts.​

References

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