What Is a Rate Buydown?
A rate buydown is when you pay upfront (or negotiate the seller to pay) to lower your mortgage interest rate—reducing your monthly payment.
The 2 Types
1. Permanent Buydown
Lower rate for the life of the loan.
👉 Best if you’re holding long-term.
2. Temporary Buydown (Most Common)
Example: 2-1 Buydown
- Year 1: -2% rate
- Year 2: -1% rate
- Year 3+: full rate
👉 Lower payments early on.
Why It Matters
Instead of cutting price, sellers are offering credits toward buydowns.
Same money…
Bigger impact on your monthly payment.
Smart Buyer Strategy
Don’t just negotiate price.
👉 Negotiate terms.
Ask for a seller-funded buydown—it can save you more month-to-month than a price cut.
Bottom Line
In today’s market, how you structure the deal matters more than the price.
