In a higher-rate environment, mortgage rate buydowns have become one of the most powerful negotiating tools available to buyers. Here's exactly how they work and when they make sense.

Real ExampleNote rate: 6.75%. Year 1 effective rate: 4.75% (~$350/month savings on a $350k loan). Year 2 effective rate: 5.75% (~$175/month savings). The seller pays roughly $5,000–$7,000 to fund this.

What Is a Rate Buydown?

A buydown uses upfront money (typically paid by the seller as a concession) to reduce your mortgage interest rate — either temporarily or permanently. You're essentially prepaying interest to lower your monthly payment.

The 2-1 Buydown

This is the most popular temporary buydown right now. It works like this: Year 1 — your rate is reduced by 2% below the note rate. Year 2 — your rate is reduced by 1% below the note rate. Year 3 onward — your rate returns to the full note rate. If you refinance before Year 3, any unused buydown funds are returned to you.

Permanent Buydown (Discount Points)

You can also permanently reduce your rate by paying points at closing. One point = 1% of the loan amount = typically 0.25% rate reduction. This makes sense if you plan to stay in the home long enough to recoup the upfront cost through monthly savings — usually 4–7 years.

Have a question about your specific situation? Call or text (269) 830-0020 directly.

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Frequently Asked Questions

Should I ask the seller to pay for a buydown?▾
In most DFW markets right now, yes — this is worth negotiating. Many sellers are willing to contribute 2–3% in concessions rather than reduce their price, which means you get real monthly payment relief. I work with your realtor to structure offers that maximize this strategy without losing the deal.

Want to see how a buydown would lower your monthly payment? I'll model it in real numbers for your specific purchase.

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