This Simple Strategy Could Save You $9K+ on Your Mortgage

Buying a home in today’s market might feel out of reach—but it doesn’t have to be. One of the best-kept secrets to making your monthly payment more manageable is using a rate buydown program. Whether you're a first-time buyer or just looking for a smart financing strategy, a buydown could be the key to affording more home, more comfortably.

💡 What Is a Rate Buydown?
A rate buydown is a mortgage financing option where a borrower or seller pays points upfront to temporarily (or permanently) lower the interest rate on the loan. This results in a lower monthly mortgage payment for a set period—typically the first 1–3 years of the loan.

🔢 Types of Rate Buydowns
Temporary Buydown (e.g., 2-1 Buydown):
The interest rate is reduced by 2% in the first year, 1% in the second year, and returns to the full rate in year three.
Example: If your locked rate is 7%, you’ll pay 5% in year 1, 6% in year 2, and 7% starting year 3.

Permanent Buydown:
You (or the seller) pay points at closing to permanently reduce the interest rate for the life of the loan.

🤝 Who Offers Rate Buydown Programs?
Many lenders offer buydown programs—but not all are created equal. I work closely with experienced lender partners who can walk you through the options and help you decide what’s best for your situation.

If you'd like to learn more, I’d be happy to introduce you to a trusted lender who offers these programs and can explain everything clearly—no pressure, just great information.

🧮 How Much Can You Save?
Let’s say you’re borrowing $400,000 at a 7% fixed rate. A 2-1 buydown could save you:

Year 1 (5%): ~$514/month

Year 2 (6%): ~$263/month
That’s over $9,300 in savings over two years.

And if you’re working with a motivated seller, they may be willing to cover the cost of the buydown as part of the deal—making this an even smarter strategy.

✅ Is a Rate Buydown Right for You?
A buydown might be a great option if:

You want lower payments early on to adjust to homeownership.

You expect your income to increase in a few years.

You’re negotiating with a seller offering closing cost assistance.

You’re planning to refinance or sell before the full rate takes effect.

📝 A Few Things to Keep in Mind
Not all loan programs allow buydowns—your lender will guide you through eligibility.

The funds used for the buydown are prepaid interest and typically non-refundable.

In many cases, this strategy offers more monthly savings than a simple price reduction.

🏁 Final Thoughts
Buying a home doesn’t have to stretch your monthly budget to the limit. With the right lender and strategy in place, a rate buydown can ease the transition into your new home and help you feel more financially comfortable from day one.

If you’re curious about this option, reach out! I’d love to connect you with a lender I trust who can break it down and help you run the numbers.

Written by: Jason Carlton, Synera Homes Powered by PLACE / Keller Williams Chesterfield