Lower payments early on - purchases only
Temporary Buydown
Start with a lower interest rate for the first year or two, then step up to your permanent rate - common structures include 3-2-1, 2-1, and 1-1 buydowns.
A temporary buydown lowers your interest rate - and monthly payment - for the first year or two of your loan, before stepping up to your permanent, fixed rate for the remaining term. It’s available on purchase loans only.
The most common structures are named for how the rate steps down each year. A 3-2-1 buydown starts 3% below your permanent rate in year one, 2% below in year two, and 1% below in year three, before leveling off at your true rate in year four. A 2-1 buydown starts 2% below in year one and 1% below in year two. A 1-1 buydown starts 1% below in year one only.
This can be a great option if you expect your income to grow, want lower payments while you settle into a new home, or are using seller or builder concessions to help fund the buydown.
We’ll walk you through the numbers so you know exactly what your payment looks like in each step-up year, and what it settles into afterward.
Ready to see if Temporary Buydown is the right fit for you?