Temporary Mortgage Buydown

Lower your monthly mortgage payment with our temporary buydown mortgage, which gives buyers a lower interest rate and lower monthly payments for 1-3 years at the start of their loan. The seller or builder provides the savings, so there’s no cost to the buyer.

Four types of temporary buydown mortgages

There are various structures for buydown terms. The most common buydown structures are a 3-2-1 buydown, 2-1 buydown, 1-1 buydown and 1-0 buydown.

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3-2-1 buydown

A 3-2-1 Temporary Buydown Mortgage reduces the homebuyer’s interest rate by 3% for the first year of the mortgage loan, 2% for the second year, and 1% for the third year. This option can significantly lower your monthly mortgage payments and save you money.

	Effective Rate	P&I	Monthly savings	Total savings
Yr 1	3.5%	$898.09	$366.05	$4,392.60
Yr 2	4.5%	$1,013.37	$250.77	$3,009.24
Yr 3	5.5%	$1,135.58	$128.56	$1,542.72
Yr 4+	6.5%	$1,264.14	$0	$0
	Total savings and seller credit			$8,944.56

2-1 buydown

The 2-1 Temporary Buydown Mortgage reduces the buyer’s interest rate by 2% for the first year of their loan and 1% for the second year.

EXAMPLE: Sale price: $450,000 | Down payment: $90,000 | Loan amount: $360,000 | 30-year fixed rate: 6.5% | Annual percentage rate: 6.619%

	Effective Rate	P&I	Monthly savings	Total savings
Yr 1	4.5%	$1,824.07	$451.37	$5,416.44
Yr 2	5.5%	$2,044.04	$231.40	$2,776.80
Yr 3	6.5%	$2,275.44	$0	$0
	Total savings and seller credit			$8,193.24

1-1 buydown

The 1-1 Temporary Buydown Mortgage reduces the buyer’s interest rate by 1% for the first two years of their loan.

EXAMPLE: Sale price: $650,000 | Down payment: $130,000 | Loan amount: $520,000 | 30-year fixed rate: 6.5% | Annual percentage rate: 6.612%

	Effective Rate	P&I	Monthly savings	Total savings
Yr 1 & 2	5.5%	$2,952.50	$334.25	$4,011
Yr 3	6.5%	$3,286.75	$0	$0
	Total savings and seller credit			$8,022

1-0 buydown

The 1-0 Temporary Buydown Mortgage reduces the buyer’s interest rate by 1% for the first year of their loan.

EXAMPLE: $450,000 | Down payment: $90,000 | Loan amount: $360,000 | 30-year fixed rate: 6.5% | Annual percentage rate: 6.619%

	Effective Rate	P&I	Monthly savings	Total savings
Yr 1	5.5%	$2,044.04	$231.40	$2,776.80
Yr 2+	6.5%	$2,275.44	$0	$0
	Total savings and seller credit			$2,776.80

The sample rates provided are for illustration purposes only and are not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard. CrossCountry Mortgage, LLC cannot predict where rates will be in the future. The payment example does not include assessments. Actual payment obligations may be greater and may vary. Mortgage Insurance Premium (MIP) is required for all FHA loans and Private Mortgage Insurance (PMI) is required for all conventional loans where the LTV is greater than 80%. Rate(s), APR(s) and payment info is valid as of 12/14/2022 and assumes a first lien position, 740 FICO score, 25-day rate lock, based on a single-family home. All terms are subject to change without notice. Loans are subject to underwriting guidelines and the applicant’s credit profiles, not all applicants will receive approval. Contact CrossCountry Mortgage, LLC for more information. Available for conventional, FHA, VA, and USDA loans only. Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call for details.

How does a temporary buydown mortgage work for homebuyers?

Buyer signs a temporary buydown mortgage agreement with CCM
Seller (or builder) funds the temporary buydown mortgage with an upfront deposit
Amount of seller’s deposit equals amount of buyer’s savings over buydown term
Deposit held in escrow account
Funds paid monthly to lower buyer’s mortgage payment

Mortgage buydown advantages

Immediate impact on lower monthly mortgage payments
Ease into homeownership (especially helpful for first-time homebuyers)
Rate protected if rates rise
Ability to refinance later if rates drop

Good for buyers, sellers, and builders

Advantages for sellers considering a price cut

Savings for the buyer without lowering the sale price

Advantages for builders who want to move inventory

An alternative incentive

Benefits for buyers stretching their dollars

Immediate monthly payment savings
Savings for 1, 2, or 3 years
A locked rate if rates increase
Room to refinance if rates fall

Temporary Buydown FAQs

Who pays for temporary buydown?

Whether it’s a 3-2-1 buydown or a 1:0 temporary buydown, the seller or the home builder pays for the rate buy down program, with no costs for the homebuyer.

Why should a seller do a buydown?

By offering savings to the homebuyer with lower monthly mortgage payments, the seller can make the property more attractive to buyers in a competitive housing market or when interests rates are high.