Real Estate Terms Glossary
What is a Buydown?
A buydown is an effective mortgage financing approach that allows the buyer to enjoy decreased interest rate on a mortgage temporarily or permanently. Home sellers increase the original home purchase price to cover the buydown agreement costs. Typically, the seller or builder of the property offers mortgage payments to decrease the interest rate. As a result, it decreases the monthly payments for the buyer.
Buydown Examples
Examples of Buydown include:
- Example 1: 2-1 buydown
- Example 2: 3-2-1 buydown
- Example 3: Permanent buydown
- Example 4: Temporary buydown
Here is a more in-depth article on buydown.
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