When qualifying for a mortgage, what interest rate will the lender use for Alex Carville if the seller pays for a permanent buy down from 10% to 8%?

In the context of mortgage qualification, lenders focus on the actual interest rate that the borrower will be paying, which is typically reflected in the final loan terms. If a seller provides a permanent buy down, it means they are covering the cost to lower the interest rate on the loan from a higher initial rate to a lower one.

In this case, the seller has reduced Alex Carville's interest rate from 10% to 8%. Since the 8% interest rate is the rate Alex will ultimately be paying on the mortgage, the lender will use this lower rate to qualify him. This reflects the idea that prospective borrowers are evaluated based on their ability to repay the mortgage under the terms they will actually face once the buy down is applied.

Thus, when determining the mortgage qualifications, the lender will utilize the final, reduced interest rate of 8%, as this accurately represents the cost of borrowing for Alex moving forward.