The lender who closes and communicates.

A temporary buydown uses a seller credit deposited into an escrow account at closing to subsidize the buyer's monthly payments during the first 1 to 3 years of the loan. The buyer's note rate stays the same. The escrow account pays the difference between the full payment and the reduced payment each month.

How the math works

• The note rate is the actual rate on the mortgage. It never changes.
• During buydown years, the buyer pays as if their rate were lower (e.g., note rate minus 2%)
• The seller credit equals the total payment difference across all buydown years
• After the buydown period ends, the buyer pays the full note-rate payment

Buydown structures

• 3-2-1: Rate drops 3% in year 1, 2% in year 2, 1% in year 3. Largest savings, highest seller cost.
• 2-1: Rate drops 2% in year 1, 1% in year 2. The most common buydown structure.
• 1-0: Rate drops 1% in year 1 only. Smallest seller credit, still meaningful savings.

Why suggest a buydown instead of a price cut?

• Buydowns give the buyer immediate monthly relief. A price cut barely moves the payment.
• The seller credit is often less than an equivalent price reduction would be
• Buydowns can help buyers qualify at the reduced year-1 payment (lender dependent)
• Great negotiation tool when rates are high and buyers are payment sensitive

What this tool doesn't account for

• Lender-specific caps on seller credits (varies by loan type and LTV)
• Whether the buyer qualifies at the buydown rate vs. the note rate
• Property taxes, insurance, or mortgage insurance. This is P&I only.
• Adjustable-rate mortgages or non-standard loan terms