Mortgage Buydown Options
Reduce your mortgage payments for the first 2 to 3 years of the loan.
To lower your monthly mortgage payment using a Mortgage Buydown, the seller contributes funds to an escrow account at closing that are used to lower the initial rate of interest you pay. Each month a portion of the buydown fund is used to subsidize your mortgage payment, which reduces the monthly principal and interest payment for the first 2 to 3 years, depending on which Buydown option you choose. With the increase in mortgage rates, this could be a great option for you to lower your monthly mortgage payment
2/1 Buydown—borrowers get a loan with a payment that’s discounted for the first 2 years (year 1 based on 2% lower interest rate, year 2 based on 1% lower interest rate) then back to the original locked rate in the 3rd year for the duration of the term.
3/2/1 Buydown—borrowers get a loan with a payment that’s discounted for the first 3 years (year 1 based on 3% lower interest rate, year 2 based on 2% lower interest rate, year 3 based on 1% lower interest rate), then back to the original locked rate in the 4th year for the duration of the term.
Program Highlights
- Borrowers can ease their way into a home with lower payments that simply step up each year of the Buydown, then are fixed for the remainder of the loan.
- Available on Conventional, FHA, and VA purchase primary residential loans.
- The borrower must qualify and meet all guidelines.
- The buydown fee must be paid by the seller.