Rate buydowns, in plain English

What a buydown is

A rate buydown means paying something upfront to get a lower interest rate — which means a lower monthly payment. Sometimes you pay for it, sometimes the seller or builder does (this is where seller credits come in). There are two main kinds: temporary and permanent.

Temporary buydown (like a 2‑1)

A temporary buydown lowers your rate for the first year or two, then it steps back up to the full rate. A “2‑1” means your rate is 2% lower in year one, 1% lower in year two, then normal from year three on. It's often paid by the seller, and it's great for easing into your payment — especially if you expect your income to grow or plan to look at a refinance later.

Permanent buydown (points)

A permanent buydown — buying “points” — lowers your rate for the entire life of the loan. You pay a cost upfront, and in return your rate and payment are lower every single month you keep the loan. The question is always: how long until the monthly savings pay back that upfront cost?

What it costs vs. what it saves

Every buydown comes down to break-even. You pay something now; you save something each month. If you'll keep the loan long enough to pass break-even, it can be a smart move. If you might refinance or move soon, maybe not. We'll run your actual numbers so it's a real decision, not a sales pitch.

When a buydown makes sense (and when it doesn't)

• Makes sense: the seller's paying for a temporary buydown to ease you in
• Makes sense: you'll keep the loan well past the break-even on points
• Maybe not: you'll likely refinance or move within a couple of years
• Maybe not: that cash is better kept as your cushion