Lower your initial housing costs with temporary buydown options
What is a Buydown?
A buydown helps make home ownership more affordable by reducing your interest rate during the first year of your loan. For example, a 3-2-1 Buydown eases you into your new home payments by reducing your effective interest rate by 3% in your first year of ownership, 2% in your second year, and 1% in year three. Comparatively, a 2-1 Buydown reduces your interest rate by 2% in the first year and 1% in year two.
Benefits of a temporary buydown
- Buy a home with confidence, knowing you’ll enjoy a lower monthly payment during your first one to three years of home ownership.
- Free up your cash flow to personalize your new home or save money.
- Protect yourself from rising rates.
How does a temporary buydown work?
- Make an offer on a single-family primary or secondary home.
- Apply for available financing options: Conventional, FHA and VA
- At closing, the seller deposits escrow funds equal to the difference between your permanent 30-year fixed payment and the reduced payments that will be in effect for the loan’s first two to three years.
- Each month, a small portion of the funds is released from the account and applied to your mortgage payment.