Housing Planning
Interest Rate Buydown Programs Explained
Buydowns lower effective rate temporarily or permanently, but total value depends on who funds the buydown and how long you keep the loan.
Common structures
- Temporary buydown (e.g., lower rate first years)
- Permanent buydown via points
- Seller-funded vs borrower-funded differences
How to evaluate value
- Total cost of buydown
- Monthly savings timeline
- Expected hold period before sale/refi
Core test: if you will likely refinance or move early, temporary structures may outperform permanent buydowns.
Checklist
- Identify who pays buydown cost.
- Calculate break-even for added cost.
- Compare with no-buydown baseline.
Compare Buydown Payment Scenarios