What Is a Temporary Rate Buydown?
A temporary buydown lowers your mortgage payment for the first one, two, or three years of your loan.
Here’s how it works:
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You lock in a regular mortgage rate, just like normal.
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For the first few years, you pay a lower rate.
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The difference is paid upfront by the seller, lender, or agent—sometimes even you, if refinancing.
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After the buydown period ends, your payment adjusts to the full rate you qualified for.
This is a great strategy if you want lower payments now and plan to refinance later when rates drop.
Buydown Options Available
| Option | Year 1 | Year 2 | Year 3 | Years 4–30 | Best For |
|---|---|---|---|---|---|
| 3-2-1 | 3% lower | 2% lower | 1% lower | Full rate | Buyers who want max savings up front |
| 2-1 | 2% lower | 1% lower | — | Full rate | Most popular option |
| 1-1 | 1% lower | 1% lower | — | Full rate | Balanced 2-year relief |
| 1-0 | 1% lower | — | — | Full rate | Using up seller or lender credits |
🛈 “3% lower” means 3 percentage points below your locked rate in year one.
Why This Makes Sense Right Now
Many experts believe mortgage rates will go down over the next few years. A temporary buydown gives you the flexibility to:
✅ Buy now instead of waiting for better rates
✅ Save money up front when you need it most
✅ Refinance later and possibly get any unused buydown funds credited to your new loan
This strategy helps you ease into your payment and avoid missing out on a home today.
Who Can Pay for the Buydown?
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The seller – often used to sweeten a deal
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The lender – when a lender credit is available
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The real estate agent – if they choose to contribute
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You, the buyer – allowed on some refinance loans
We’ll help you structure it based on your situation.
What Loan Types Are Eligible?
We offer temporary buydowns on a wide range of loan programs:
✔️ Conventional loans (fixed and adjustable)
✔️ FHA and VA loans
✔️ Bank statement loans (for self-employed buyers)
✔️ Select jumbo loans
❌ Not available for USDA or construction loans
A Simple Example
Let’s say you buy a home and lock in a rate of 6.000% (APR 6.245%) on a $350,000 loan. You choose a 2-1 buydown:
| Year | Payment Based On | You Save About |
|---|---|---|
| 1 | 4.000% | $400/month |
| 2 | 5.000% | $200/month |
| 3–30 | 6.000% | $0 |
💡 Total savings: around $7,300 over two years
If you refinance before the buydown ends, you might get the remaining buydown funds refunded or applied toward your new loan.
This is a sample only. Actual savings will depend on your loan terms. Taxes and insurance are not included in the estimate.
Benefits for Buyers, Sellers & Agents
| For Buyers | For Sellers & Agents |
|---|---|
| Lower monthly payment at the start | Can help a home sell faster |
| Easier transition from renting | Doesn’t require cutting price |
| Time to refinance if rates fall | Great use of unused credits |
| Keeps more cash in your pocket | Adds value to a listing |
What Happens After the Buydown Ends?
You’ll begin making the regular mortgage payment based on your full interest rate.
📌 Important: You have to qualify based on the full payment, not the discounted one, so there’s no surprise down the road.
Is a Temporary Buydown Right for You?
If you’re thinking about buying now but expect rates to drop later, a buydown can help ease into your payment and give you time to refinance when the time is right.
👉 Let’s review your numbers and see what works best for your budget.
📅 Apply Now or schedule a call to walk through your options.
Required Disclosures
All loans are subject to credit approval and program guidelines. Rates and terms may change without notice until locked. Buydown payments come from a prepaid account and are not a permanent rate change. You’ll make the full payment based on your locked rate after the buydown ends. This is not a commitment to lend. Licensed in AZ, PA, FL, and TX. NMLS ID 1229453.
Get started today!
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