Temporary Buydown
How much seller credit do you need?
Temporary buydowns let you start with a lower payment for the first 1–3 years of your loan, with the difference funded by a seller credit at closing. Plug in your numbers and we’ll show you exactly what to ask for — plus how it compares to negotiating a price reduction or a permanent rate buy-down.
Purchase
Other monthly costs
Buydown structure
Year 1 at 5.00%, year 2 at 6.00%, year 3+ at the full 7.00% note rate. The most common buydown in 2024–2026.
That’s the dollar amount the seller funds at closing to cover 24 months of reduced payments. After that, your payment steps up to the full note-rate payment of $3,638/mo.
Your payment, year by year
Negotiate this concession with confidence.
We'll price your purchase at today's wholesale rates and structure the 2/1 buydown into your offer. Free, soft pull only, no SSN.
How this compares to other concessions
The seller is putting $10,255 on the table. Three ways to take that same dollar amount:
Temporary buydown (this scenario)
Lower payment for 24 months only. Loan amount stays the same.
Price reduction
Seller cuts the home price by the same dollar amount. Smaller loan, slightly lower PITI for the entire life of the loan.
Permanent rate buy-down (points)
Spend the credit on discount points for a permanently lower rate. Rule of thumb: ~2.33 pts ≈ 0.58% off the rate, ending at 6.417%.
Permanent buy-down comparison uses a 0.25% rate reduction per point as a rough estimate. Real lender pricing varies by loan type, FICO, and LTV — request a quote for your scenario.
If you refinance during the buydown
Most lenders apply any unused subsidy to your principal balance at payoff. So if you refinance halfway through year 2 of a 2/1, the unspent half (~$2,564 in this scenario) gets credited to your remaining balance. Confirm specifics with your lender — terms vary on whether the subsidy refunds go to the borrower or the original concession-payer.
How temporary buydowns actually work
Your loan amortizes at the full note rate the entire time. The buydown is a cashflow subsidy, not a different loan. Year 1 of a 3/2/1 at 7% has you paying the equivalent of a 4% payment, but the loan balance after year 1 is identical to a no-buydown loan at 7%.
The subsidy is escrowed at closing. Whoever funds it (typically the seller as a closing-cost concession) pays the full subsidy upfront. Each month, the lender draws from that escrow to make up the difference between what you pay and the full note-rate payment.
You qualify on the full note rate. Fannie Mae, Freddie Mac, FHA, and VA all require lenders to qualify temp-buydown borrowers at the post-buydown rate (year 4+). Your DTI, max loan amount, and approval don’t change because of the buydown.
Refinance or sell during the buydown? Any unused subsidy is typically credited to your principal balance at payoff (most common when the seller funded it). Specifics vary by lender — ask before you sign.
When it makes sense: rates are elevated, you expect them to fall before the buydown ends, and a seller has motivation to give a concession (extended DOM, soft market, builder incentives). The dollar value of a buydown is usually similar to an equivalent price reduction — but the buydown shows up as lower monthly payments rather than a smaller loan, which often matters more for cash-flow-tight buyers.