Rate Buy Downs: Lower Your Monthly Payment When Rates Are High
In this guide, we’ll explain how mortgage rate buydown programs work, the difference between temporary and permanent buydowns, and how you can use them to save money and reduce your monthly payments, especially when interest rates are high.
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What is a Mortgage Rate Buydown?
- Lower monthly payments, either short-term or long-term
- Flexible options depending on your budget and goals
- The ability to use seller or builder-paid buydowns to reduce your rate at little to no cost
- Strategic payment planning that makes homeownership more affordable today
Quick Answer
A mortgage rate buydown enables you to pay an upfront fee or utilize a specific program to temporarily or permanently lower your interest rate, reducing your monthly mortgage payments and saving on interest.
The Difference Between Temporary and Permanent Rate Buydowns
Each loan type comes with its own set of benefits to help you achieve your homeownership goals.
Temporary Rate Buydowns
Reduces your interest rate by a set amount for a set period of time. For example, a 2-1 rate buydown lowers your rate by 2% for the first year, 1% for the second year, and returns to the original rate for the third year of your mortgage.
Permanent Rate Buydowns
As the name suggests, this permanently lowers your rate by a set amount for the life of the loan. The amount your rate is reduced is determined by the number of mortgage points you pay out of pocket or with seller concessions.
Pro Tip
You can combine a rate buydown with one of UMortgage’s other cost-saving programs, like our 1% down payment program or a state/county first-time homebuyer program.
What Type of Rate Buydown Should You Consider?
Temporary Rate Buydown
Permanent Rate Buydown
Can I refinance out of a temporary rate buydown if rates drop?
Yes! If you get a temporary rate buydown and rates end up dropping before your temporary buydown period ends, you can refinance to that lower, fixed rate.
What's your budget?
Curious about how much you can afford to spend on a home? Use our calculator to get an estimate on your maximum budget.
Maxiumum Home Price
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Maxiumum Monthly Payment
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The UMortgage mortgage calculators are for estimation purposes only. This is not a commitment to lend. For an exact quote based on your individual financial circumstances, please contact us.
How to Apply for a Rate Buydown
Get Pre-Approved
We’ll assess your loan profile and determine if you qualify for a buydown based on your rate, budget, and home price.
Explore Buydown Options
We’ll walk you through your temporary and permanent buydown scenarios and consider whether you're paying points or using seller concessions.
Structure the Loan
Choose the option that works best for your goals. We’ll build it into your loan estimate and negotiation strategy.
Underwriting & Closing Your Loan
Finalize your loan and enjoy reduced monthly payments from day one—whether that's for a few years or for the full loan term.
Frequently Asked Questions About Rate Buydowns
Answers to the most common questions we get from clients about rate buydowns.
Here's Why UMortgage is Your Best Choice
Relationships, Not Transactions
We’re here for more than just your mortgage. We’ll stick with you beyond closing to help you gain financial freedom through homeownership.
Local & Nationwide Expertise
With licensed loan officers across the country and deep knowledge of your local market, we’ll help you buy with confidence anywhere you call home.
Fast, Transparent Closings
We communicate with you every step of the homebuying or refinance process so you can close quickly without any hidden fees or surprises.