Buying a home often comes with a lot of moving pieces — new expenses, changing routines, and financial adjustments that can feel especially noticeable in the first few years. For qualified buyers, a temporary mortgage buydown may help manage monthly payments during the early transition period while maintaining long-term loan stability.
Temporary Buydown Programs are designed to provide short-term payment relief at the start of the loan, with a clear path back to the full note rate over time.
What Is a Temporary Buydown?
A temporary buydown is a financing strategy that reduces the borrower’s interest rate — and corresponding monthly principal and interest payment — for a limited period at the beginning of the loan term. Common structures include:
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1-0 Buydown – Reduced rate for the first year
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2-1 Buydown – Reduced rate for the first two years
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3-2-1 Buydown – Reduced rate for the first three years
After the buydown period ends, the loan automatically adjusts to the original fixed note rate for the remainder of the term.
In many cases, the buydown is funded by the seller, builder, or lender as part of the transaction, rather than increasing the borrower’s loan amount.
Why Buyers Consider a Temporary Buydown
Lower Payments When Expenses Are Often Highest
The first few years of homeownership can include added costs such as moving expenses, furnishing a new home, childcare changes, or adjustments to household income. A temporary buydown may help reduce monthly payments during this period, offering added flexibility as you settle in.
Seller-Funded Affordability Option
Because buydowns are often funded by the seller or builder, they can be a useful negotiation tool—particularly in markets where sellers are open to concessions—without permanently altering the loan structure.
Fixed-Rate Stability Over the Long Term
Unlike adjustable-rate mortgages, temporary buydowns do not change the terms of the mortgage note. The loan returns to the original fixed interest rate after the buydown period, providing predictable payments for the remainder of the loan term.
No Refinancing Required
Once the temporary period ends, the payment simply adjusts to the note rate. There is no requirement to refinance, though borrowers may explore refinancing options in the future if circumstances or market conditions change.
Is a Temporary Buydown the Right Fit?
A temporary buydown may be a helpful option for buyers who want lower initial payments, long-term fixed-rate stability, and added flexibility during the early years of homeownership, often through a seller-funded affordability strategy.
It’s important to understand that temporary buydowns are intended as short-term payment adjustments, not long-term affordability solutions. Monthly payments are scheduled to increase once the buydown period ends, and borrowers should be comfortable with the full note payment when it applies. Availability and structure depend on loan program guidelines, property type, and borrower qualifications.
As with any mortgage decision, alignment matters — between today’s budget and tomorrow’s payment. An ACM loan officer can help you review how a temporary buydown may fit within your broader financial picture.
Ready to take the next step?
CENTURY 21 Redwood Realty partners with Atlantic Coast Mortgage to provide clients, friends, and family with a clear, supportive mortgage experience, guiding you every step of the way, from “What’s Next?” to “Welcome Home!”
* Eligibility for all applicants cannot be guaranteed. Atlantic Coast Mortgage (“ACM”) and Century21 Redwood Realty are separate entities and are not affiliated. Consumers are not obligated to use either or both entities to obtain financing or purchase a property.
