What is a rate buydown?
A rate buydown uses an upfront payment to lower your interest rate, either permanently (discount points) or temporarily (a 2-1 or 3-2-1 buydown that steps up over the first years). The seller or builder often funds temporary buydowns.
It reduces your payment, with permanent buydowns helping long-term and temporary ones easing the early years. We'll show which buydown saves you the most for how long you'll stay.
Lowering your rate
A rate buydown means paying to reduce your interest rate. There are two kinds: a permanent buydown using discount points, and a temporary buydown that lowers the rate for the first year or two.
Both aim to shrink your monthly payment, just over different time frames.
Which type fits
A permanent buydown suits buyers staying long term. A temporary buydown, often seller-funded, helps with early payments in a high-rate market.
The right choice depends on how long you will keep the loan. Reach out and we will compare both for your situation.
Verify the details for your own situation against these government and agency sources: Freddie Mac Primary Mortgage Market Survey and Federal Reserve H.15 selected rates.