Temporary Buydowns: The Most Misunderstood Tool in Mortgage Right Now

Ask most buyers (and even some agents) what a buydown is, and the answer usually falls into one of two categories:

❌ “Isn’t that just paying points to get a lower rate?”

❌ “That’s one of those gimmicks sellers use when the house isn’t selling, right?”

Wrong and wrong.

What is a Temporary Buydown?

A temporary buydown is a seller-paid strategy that reduces your monthly payment for the first 1–3 years of the loan.

For example:Let’s say your locked rate is 6.5%.With a 2-1 buydown, your rate is:

• Year 1: 4.5%

• Year 2: 5.5%

• Year 3+: 6.5% (permanent note rate)

  
  

The cost of that buydown is usually paid by the seller as part of a negotiated credit — and does not increase your loan balance.

Why Use a Buydown Now?

• Buyers ease into their full payment instead of getting slammed up front

• It bridges the gap until a refinance (within 12–24 months)

• It’s easier to negotiate seller credits than price cuts in most markets

• It makes offers more attractive without lowering contingencies

Bonus: Unused buydown funds (if you refinance early) are credited back to the principal.

How We’re Using Them Strategically:

This month alone:

• One buyer saved $6,800 in their first 24 months

• Another structured a 3-2-1 buydown using builder credit + lender incentive

• One agent used this tactic to win a multiple-offer situation without raising the purchase price

Want to see what a buydown could do for you or your client?

Let’s run a side-by-side comparison. The numbers speak for themselves.