A Lower Payment for the First Years of Your Loan
Lower your monthly payments in the first few years with a temporary buydown. Sellers or builders fund the account, lowering your initial rate and payment without changing your long-term interest rate.
See every year's payment before you write the offer
Select your estimated home price, down payment, and rate to preview your annual payment savings with a temporary buydown.
| Year | Effective Rate | Monthly Payment | Monthly Savings |
|---|
A temporary buydown allows lower payments early on without altering the underlying interest rate of your loan. The difference in payments is funded entirely by a seller or builder concession deposited at closing.
The money is set aside at closing
Negotiate the concession
Request seller or builder credit to cover the buydown cost as part of your purchase agreement offer.
Fund the escrow account
At closing, the total concession funds are placed into an escrow account held directly by the lender.
Pay the reduced amount
Each month during the buydown period, funds from the escrow automatically supplement your payment.
Plan for the full payment
When the temporary period ends, you simply transition to paying the original full monthly note payment.
Four structures, one rule
For all temporary buydowns, the interest rate increases by 1% each year until reaching the full note rate.
- Year 1: -3% off note rate
- Year 2: -2% off note rate
- Year 3: -1% off note rate
- Years 4-30: Full Note Rate
The ultimate flexibility for significant initial payment savings.
- Year 1: -2% off note rate
- Year 2: -1% off note rate
- Years 3-30: Full Note Rate
The most popular choice for balanced upfront relief.
- Year 1: -1% off note rate
- Year 2: -1% off note rate
- Years 3-30: Full Note Rate
Provides a consistent 2-year initial discount rate.
- Year 1: -1% off note rate
- Years 2-30: Full Note Rate
Simple one-year discount to ease into a home purchase.
Temporary vs. permanent buydowns
A permanent buydown lowers your interest rate for the entire 30-year life of the loan using discount points. A temporary buydown creates larger payment reductions in the first 1–3 years, which is ideal if you anticipate income growth or refinancing opportunities.
If you refinance or sell early
Any unspent money remaining in the buydown escrow account isn't lost. If you sell the home or refinance before the buydown period completes, remaining funds are applied directly toward paying down your principal balance.
Put a concession to work
A seller credit or builder incentive can lower your upfront monthly payments without forcing a seller to reduce their overall asking price.
- Reduce initial payments dramatically with a temporary buydown
- Lower your standard rate permanently with discount points
- Cover closing costs to drastically cut out-of-pocket cash requirements
Same concession, two outcomes
Comparing a $10,000 price drop vs. a $10,000 temporary buydown credit on a $750k home:
| Strategy | Monthly Impact |
|---|---|
| $10,000 Price Drop | Saves ~$53 / mo for 30 years |
| $10,000 Buydown Credit | Saves ~$337 / mo in Year 1 |
Temporary buydowns deliver over 6x the monthly cash flow impact early on when expenses are highest!
Straight answers
The exact concession depends on the loan size and structure. The concession must equal the exact sum of payment subsidies over the buydown term. Our calculator above determines the exact dollar amount needed.
No, underwriting requirements require you to qualify at the full note rate (the non-discounted rate) to ensure long-term affordability and financial security.
Temporary buydowns are typically funded by seller concessions, builder credits, or lender contributions. In standard primary residential transactions, buyers cannot directly fund their own temporary buydown escrow.
If you refinance or sell the home before the escrow funds are completely used, any remaining balance in the account is credited toward paying off your principal mortgage balance.
For most buyers, yes! A $10,000 price drop typically reduces payments by only ~$50/month, whereas a $10,000 buydown credit can save hundreds per month during your initial years of ownership.
Get a Written Buydown Quote
Learn your exact rate and options before you write your offer:
Kellen Law
Senior Loan Officer • NMLS# 1840003
Direct Mortgage Lending