Loan Program
Interest Rate Buydown
Pay less upfront to save more long-term
What is a Interest Rate Buydown?
An interest rate buydown is a financing technique where discount points are paid at closing to permanently (or temporarily) lower the mortgage rate. In higher-rate environments, buydowns can make homeownership significantly more affordable. Sellers can also contribute to buydowns as a closing incentive. The 2-1 buydown, for example, reduces the rate by 2% in year one and 1% in year two before settling at the note rate in year three.
Key Features
- Permanent or temporary buydown options
- 2-1 and 3-2-1 temporary buydown programs
- Seller-funded buydowns available
- Lower payments during initial ownership years
- Predictable rate after buydown period
Requirements
- Standard qualification requirements
- Buydown amount paid at closing
- Seller concession within program limits
- All standard loan eligibility criteria apply
- Applicable to most loan types
At a Glance
Min. Down Payment3%
Min. Credit Score620
Best For
- Buyers wanting lower initial payments
- Sellers seeking to attract buyers
- Buyers in a higher-rate environment
- Those expecting income growth over time
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