The headline rate at KB Home's Veranda in Centerville is a 5/1 FHA adjustable-rate mortgage "as low as 4.99%," with a 5.781% APR. To get it, a buyer has to sign a purchase agreement by October 31, 2026, finance with KB's affiliated lender, lock the rate within 30 days, and close with that same lender. That leaves 19 days from today to sign. The deadline matters for another reason. The offer is a builder's response to a Fremont condo and townhome market that has clearly slowed, and it is built to lower your payment without lowering the price written on the contract.
The rate comes with a lender attached
KB's offer terms list five conditions for the rate buydown contribution.
- Sign a purchase agreement by 10/31/26.
- Finance with KBHS Home Loans and qualify for an eligible loan.
- Sign a rate lock agreement with KBHS within 30 days of the purchase agreement.
- Confirm in writing that the home will be owner-occupied.
- Close escrow with KBHS as the lender.
The terms say a buyer "may use another lender but will be ineligible for this offer." They also say "certain communities may be excluded," so confirm that Veranda is eligible in writing, even though the Veranda community page shows the rate banner at the top.
KB discloses that it and KBHS share common ownership and "may receive a financial or other benefit." KB also says the buyer is not required to use KBHS. The CFPB's RESPA affiliated business rule calls for a written disclosure of an affiliate relationship and its estimated charges, and it generally bars requiring a buyer to use a particular settlement provider. The house is available with any lender. The discount is available with one.
That matters to a buyer who has already been pre-approved elsewhere. The comparison is no longer lender against lender. It is KBHS with the builder's contribution against your own lender without it.
Why a builder discounts the loan, not the house
Bay East Association of REALTORS splits Fremont's August 2026 numbers into attached and detached homes, and the two read like different markets.
| Fremont, August 2026 | Condos and townhomes | Detached single-family |
|---|---|---|
| Median sales price | $736,500 | $1,545,000 |
| Average price per sq. ft. | $604 | $1,057 |
| Average days on market | 47 | 21 |
| Months of inventory | 3.5 | 1.6 |
| Sale price vs. list | 99% | 102% |
| Units sold | 31 | 74 |
Fremont's detached homes were still selling above asking in August. Attached homes took more than twice as long to sell, had more than twice the months of supply, and closed slightly under list, according to Bay East's condo and townhome report and its detached-home report. Across Alameda County, the California Association of REALTORS August 2026 release put the single-family median at $1,285,000 with a 2.3-month unsold inventory index.
A builder selling attached homes into that market has two levers. It can cut the price, which shows up in the recorded sale price that the next appraiser and the next buyer will see. Or it can put money toward the buyer's interest rate, which leaves the contract price alone. KB's terms say the advertised APR "factor[s] in a $5,000 closing cost credit and additional seller contributions from KB Home." That money goes toward the loan, and the contract price stays where it is.
Prices have moved anyway. KB's February 5, 2026 grand opening announcement quoted pricing "from low $1 million." The community page now starts at $854,990, plus the cost of solar and any homesite premium. The sources don't say whether that lower entry price is a price cut or simply a smaller plan that is now on the list. Either way, the cheapest way into Veranda today costs well under what the opening release advertised.
What 4.99% buys over five years, and what happens at month 61
KB's example uses a $471,797 FHA loan with 3.5% down. Principal and interest are $2,530 a month for months 1 through 60 at 4.99%. For months 61 through 360, the example shows $2,960 at 6.43%, with a 7.225% APR. The reset assumes a 2.00% margin plus a 4.30% CMT index. That loan is smaller than any Veranda purchase would need.
Scaled to Veranda's entry plan, 3.5% down on $854,990 leaves a base loan of about $825,000. Using KB's own rates, principal and interest come to roughly $4,420 a month for the first five years. After the reset, they rise to roughly $5,180, an increase of about $750 a month. Those figures are arithmetic from KB's example. They don't include FHA mortgage insurance, property taxes, insurance, or HOA dues. KB's pages don't disclose the HOA dues or any special assessment amount, so the real monthly cost can't be calculated from public material yet.
The reset rate isn't fixed either. The CFPB explains that after the introductory period, the index plus the margin sets the new rate within the loan's caps. KB's caps are 1% at the first adjustment, 1% at each yearly adjustment after that, and 5% over the life of the loan. On a loan that starts at 4.99%, the lifetime cap allows a rate as high as 9.99%. The 6.43% in KB's example reflects the index on September 24, 2026, not a promise.
Two FHA rules limit how far a builder can push this structure. HUD's Handbook 4000.1 caps a builder's total contributions at 6% of the sales price, and temporary and permanent rate buydowns both count toward that cap. On an $854,990 home, that comes to about $51,300. KB's terms say the buyer pays any buydown cost above KB's contribution. The same handbook doesn't allow temporary rate buydowns on FHA ARMs. So the 4.99% isn't a short teaser that fades after a year or two. It is the note rate for the first five years, and the loan documents should show exactly how it was paid for.
Veranda's prices per square foot, measured against Fremont's resale condos and townhomes
The rate offer makes most sense next to the price spread. KB lists these plans and prices on the Veranda page, before solar and any homesite premium.
| Plan | Beds / baths | Sq. ft. | List price | Price per sq. ft. |
|---|---|---|---|---|
| 1165 | 2 / 2.5 | 1,165 | $854,990 | about $734 |
| 1394 Modeled | 3 / 3 | 1,394 | $999,990 | about $717 |
| 1629 | 3 / 3.5 | 1,629 | $1,149,990 | about $706 |
| 1725 End Unit with ADU | 3 / 3.5 | 1,725 | $1,234,990 | about $716 |
Fremont condos and townhomes averaged $604 per square foot in August 2026. At that average, a 1,165-square-foot resale home would cost about $704,000, roughly $151,000 less than the entry Veranda plan. That citywide average mixes every age, location and condition, so it's a rough benchmark, not an appraisal. Even so, the size of the gap tells you something. Under KB's assumptions, the rate offer saves about $750 a month for 60 months on the entry plan, or roughly $45,000, and FHA caps the builder's total contribution near $51,300 at that price.
KB lists what that premium buys. Homes are designed to meet ENERGY STAR certification, a personalized home is delivered in four to five months, there are two-car garages, one plan includes a separate ADU, and the site is at the corner of Fremont Boulevard and Peralta Boulevard near Dusterberry Park. The page also showed three move-in-ready homes, the only ones that could close quickly enough to fit a shorter timeline.
Every Veranda plan fits under Alameda County's FHA limit
Alameda County is a high-cost area. For 2026, both HUD's FHA one-unit limit and FHFA's conforming limit are $1,249,125, compared with a national conforming baseline of $832,750. At 3.5% down, even the $1,234,990 ADU plan needs a base loan of about $1,191,700, under both limits before solar and premiums. That's why KB can advertise an FHA product across the whole community. A loan under the limit doesn't make a particular unit FHA-eligible, though. KB describes Veranda's homes as townhome-style condos, and the sources don't confirm whether the project has FHA condo approval.
Questions to get answered in writing before October 31
- Is Veranda included in the current KBHS rate program, and what note rate, APR and points apply to the specific homesite?
- How much is KB contributing in total, and how much of the buydown cost falls to the buyer?
- What are the monthly HOA dues, and are there any special assessments or community facilities district charges?
- Does the project have the FHA approval the loan needs?
- What do solar and the homesite premium add to the contract price?
- What would an outside lender quote at that same contract price, with no builder contribution?
FAQ
Can I buy at Veranda with my own lender? Yes. KB's terms allow it, but a buyer who uses another lender doesn't get the rate offer.
Does the 4.99% rate last for the whole loan? No. It applies to the first 60 months. After that, the rate adjusts based on the index plus a 2.00% margin, within KB's 1/1/5 caps.
Is the offer good after October 31? The terms require a signed purchase agreement by 10/31/26, and KB says it can change or end the promotion at any time.
Glen D'souza spent years as a banker and mortgage officer before becoming a REALTOR®. A builder rate buydown is exactly the kind of offer he takes apart line by line: the note rate, the contribution, the payment after month 61, and the outside-lender quote it should be compared against. If you're weighing a Veranda contract against a resale townhome before the October 31 deadline, Glen Dsouza can run both sets of numbers with you. Schedule a free consultation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
