Temporary Rate Buydowns

We provide Temporary Rate Buydowns, which can be seller-paid or lender-paid, to help borrowers lower their interest rate for the first 12 to 36 months of their mortgage. The upfront fee for a seller-paid buydown can be covered by seller concessions, while a lender-paid buydown can be covered by lender credit (from taking an above-par interest rate). Borrowers with seller concessions or those who seek a lower interest rate at the beginning of their mortgage to reduce monthly payments may qualify, provided that they meet the initial note rate requirements.

The BENEFITS of the Temporary Rate Buydown include helping sellers sell properties without affecting the sales price, allowing borrowers to use excess seller concessions, providing a lower interest rate for the first 1-3 years to reduce monthly payments, and making it easier to transition from renting to buying. Borrowers can use the monthly savings for renovations, upgrades, or furniture. In a high-interest rate environment, borrowers can refinance to a lower rate than the one they would adjust to after the 1-3 years.

Buydown Parameters:

  • purchases only,

  • eligible products:

    • Conventional fixed and ARMs on primary and second homes

    • Prime Jumbo 30-Year Fixed on primary and second homes

    • FHA and VA primary homes

    • No USDA or Non-Agency products

  • tiered options (see below)

  • The Temporary Rate Buydown fee depends on the type and duration of the buydown

    • contact us for more information on the cost breakdown and strategy for utilizing temporary rate buydowns. They are not necessarily the best option for you.

Buydown ‘Tiered’ Options:

  • 3-2-1 buydown: mortgage note interest rate reduced by 3% in year 1, 2% in year 2, 1 % in year 3, returns to note rate thereafter. *Examples shown are not an offer to loan and given for educational and informational purposes only.

    • *Ex: note rate is 6%;

    • year 1: 3%,

    • year 2: 4%,

    • year 3: 5%,

    • rate returns to 6% thereafter

  • 2-1 buydown: mortgage note interest rate reduced by 2% in year 1, 1% in year 2, returns to note rate thereafter

    • *Ex: note rate is 6%;

    • year 1: 4%,

    • year 2: 5%,

    • rate returns to 6% thereafter

  • 1-1 buydown: mortgage note interest rate reduced by 1% in year 1 and year 2, returns to note rate thereafter

    • *Ex: note rate is 6%;

    • year 1: 5%,

    • year 2: 5%,

    • rate returns to 6% thereafter

  • 1-0 buydown: mortgage note interest rate reduced by 1% in year 1, returns to note rate thereafter

    • *Ex: note rate is 6%;

    • year 1: 5%,

    • rate returns to 6% thereafter

*Examples shown are not an offer to loan and given for educational and informational purposes only.

Refinancing Considerations

Just as with any residential mortgage we offer, the soonest you can refinance your property after obtaining a new mortgage through a purchase (or refinance) is 6 months after closing on your home/mortgage.

FAQ on refinancing before a buydown is complete:

1) If I am able to get a temporary rate buydown to reduce my mortgage note interest rate am I still able to refinance before the buydown period is over?

YES, you can refinance just as you normally would with any other mortgage transaction (e.g., mortgage application, documents, etc.). There are no negative hidden terms related to refinancing timing with our temporary rate buydowns.

2) If I do refinance, what are the consequences for the buydown fees that were already paid?

Good news: the fees paid to obtain the temporary rate buydown are not lost when you refinance before the term is complete!

The leftover credit from the buydown simply goes towards your remaining mortgage loan at the time of the refinance.

*For example:

  • If you are able to obtain a 1-1 buydown (reduces mortgage note interest rate by 1% for first two years) and it costs ~$5000 in total, this would be $2500 applied in year 1 and $2500 applied in year 2

  • If you refinance exactly 1 year after closing on your purchase you would have used $2500 in credit and still have $2500 in credit left

  • The leftover $2500 in credit would go towards reducing your remaining home loan as part of the overall refinance structure

*Examples shown are not an offer to loan and given for educational and informational purposes only.

Subject to borrower approval

Not an offer to loan