Temporary Buydown
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A temporary buydown lowers the interest rate for the first one to three years of a loan using funds placed in an escrow at closing.
What Temporary Buydown means
Common structures are 2-1 and 3-2-1 buydowns, often paid by a builder or seller. The rate steps up annually to the note rate, after which payments are normal.
Florida example
A Florida builder funds a 2-1 buydown on a 6.75% loan, so the buyer pays as if the rate were 4.75% in year one and 5.75% in year two, easing into the full payment by year three.
How it works
A temporary buydown lowers your interest rate for the first year or two, then it rises to the full rate. A 2-1 buydown is a common example.
The upfront cost is often paid by the seller or builder.
Who it fits
It helps buyers who expect income to grow or who want lower early payments. The savings are front-loaded.
We run the numbers on any buydown offer. Apply now and we will show if it works for you.
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