Buydown
A buydown is paying money upfront to lower a mortgage's interest rate, either permanently with discount points or temporarily for the first few years.
What Buydown means
A permanent buydown trades points for a lower rate over the full term. A temporary buydown, like a 2-1, reduces the rate by two points in year one and one in year two before settling at the note rate.
Florida example
Florida builders frequently offer a 2-1 buydown as an incentive: on a 6.75% loan, you'd pay as if the rate were 4.75% in year one and 5.75% in year two. The builder funds an escrow that covers the difference.
Paying to lower your rate
A buydown means paying upfront to reduce your interest rate. A permanent buydown uses discount points to lower the rate for the whole loan. A temporary buydown lowers it for the first year or two.
The goal is a smaller monthly payment, either short term or for the life of the loan.
Who pays and when it fits
Sellers and builders often fund a temporary buydown as a concession to help buyers in a higher-rate market. A permanent buydown suits buyers staying put long term.
The right choice depends on how long you will keep the loan. Reach out and we will compare a buydown to points for you.
Related program: Learn more →
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.