Use your money back to lower your mortgage rate.
A rate buydown trades cash at closing for a lower payment. Here's how the two main types work.
Talk to a lender, no obligation
We'll connect you with a local lender. No obligation, no cost to talk. SelfCloze doesn't receive any fee from lenders.
Loading the calculator…
The short version
- A permanent buydown lowers your rate for the life of the loan. You pay points at closing.
- A temporary buydown, like a 3-2-1, lowers your payment for the first 1–3 years, then it goes to your full rate.
- You qualify at the full rate either way. Your rebate can often help pay for it — ask your lender.
Terms, explained
- Note rate
- The rate written on your loan. It's what you pay once any temporary buydown ends.
- Discount point
- A fee equal to 1% of the loan, paid at closing to lower the rate. One point often buys about 0.25%, but it varies by lender and by day.
- Permanent buydown
- Paying points so the lower rate lasts the whole loan.
- Temporary buydown
- Money escrowed at closing that covers part of your payment for the first years. A 3-2-1 is 3% lower in year one, 2% in year two, 1% in year three, then the note rate.
- Break-even
- How many months of lower payments earn back what you paid. Cost divided by monthly savings.
- Refinance
- Replacing the loan later, which ends any remaining buydown benefit.
Who can pay for it, and how much
Money from the seller, the agent or a builder is an interested-party contribution, and every loan programme caps it. The cap is on the total contribution, not on the buydown alone.
| Loan programme | Cap |
|---|---|
| Conventional, under 10% down | 3% |
| Conventional, 10–25% down | 6% |
| Conventional, 25%+ down | 9% |
| FHA | 6% |
| VA | 4% in concessions, on top of normal closing costs |
| USDA | 6% |
Permanent vs. temporary
Run your numbers
Permanent buydown
Freddie Mac average, week of 9/17/2026. Your rate will differ.
Varies by lender and by day. One point often buys about 0.25%.
Monthly savings
$133
New rate 6.70%
- Payment now
- $5,296/mo
- Payment after
- $5,162/mo
- Cost at closing
- $8,000
- Break-even
- 60 months (about 5.0 years)
- Interest saved in 5 years
- $10,063
- Interest saved in 10 years
- $20,116
- Interest saved over 30 years
- $48,009
Estimate. Standard 30-year amortisation. Figures reviewed 2026-09-24.
Temporary buydown
Freddie Mac average, week of 9/17/2026. Your rate will differ.
Total buydown cost
$36,595
Full payment after the buydown: $5,296/mo
| Year | Rate | Payment | Saved |
|---|---|---|---|
| 1 | 3.95% | $3,796 | $17,991 |
| 2 | 4.95% | $4,270 | $12,305 |
| 3 | 5.95% | $4,771 | $6,298 |
| After | 6.95% | $5,296 | — |
The cost is escrowed at closing and someone has to fund it — you, the seller, or the builder.
If you refinance during a temporary buydown
The unused escrowed funds typically go toward your loan balance rather than disappearing. Lenders differ, so ask yours how they handle it before you agree to one.
Same money, two ways
$18,603 buys a 2-1 buydown, or about 2.3 points permanently (6.37% instead of 6.95%).
After 3 years
Temporary$18,603Permanent$11,086After 5 years
Temporary$18,603Permanent$18,477After 10 years
Temporary$18,603Permanent$36,954
The permanent option keeps paying after year 3, which is the whole trade-off.
When each makes sense
Permanent
You'll keep the loan a long time and you want the lowest payment for good. The maths turns on your break-even: if you'll still be in the loan well past it, the points pay for themselves.
Temporary
You expect your income to grow, or you think rates will fall and you'll refinance. You want the relief in the early years, when it's tightest.
IMG-RB-2
A friendly lender or advisor portrait for the CTA block.
Ready to talk to a lender?
A buydown has to be priced by whoever is writing your loan. We'll introduce you to one we work with, and we're not paid for the introduction.
Talk to a LenderBuying next? What would you do with an extra $25,000 at closing?
The seller pays your agent. We keep a flat fee. You use the rest to lower your rate. 7% → 5% = over $900 a month back in year one.
See your numberExample temporary rate buydown on a $1M San Diego home with 20% down and a 30-year fixed loan at 7%. The lower rate applies to the early years of the loan, and terms vary by lender. Assumes the seller offers 3% to the buyer's agent. Lender approval required. Estimate only, not a guarantee.
How SelfCloze helps
Your rebate is applied at closing. Depending on your loan, it can pay for points or fund a temporary buydown instead of going only to fees — which turns a one-time credit into a lower payment every month.
Questions people ask
- Can the seller pay for my buydown?
- Often, yes. It counts as an interested-party contribution, and your loan programme caps how much of that you can take. Conventional allows 3% under 10% down, 6% from 10–25% down and 9% above that. FHA allows 6%, USDA 6%, and VA allows 4% in concessions on top of normal closing costs.
- Do I qualify at the lower rate?
- No. Lenders qualify you at the note rate — the full rate you'll pay once any temporary buydown ends. A temporary buydown makes the early payments easier; it doesn't make you eligible for a bigger loan.
- Can I use a buydown on an FHA or VA loan?
- Both permanent points and temporary buydowns are allowed on FHA and VA loans, within each programme's contribution limits. The details vary by lender, so confirm before you write the offer.
- What happens if I refinance?
- A permanent buydown ends, and you don't get the points back. With a temporary buydown the unused escrowed funds typically go toward your loan balance. Ask your lender how they handle it, because it isn't uniform.
Selling and buying? Get up to $25,000 back on the buy.
When you buy a home, the seller usually pays your agent about 3%. On a $1M home that's about $30,000. We keep a flat $4,999 and give you the rest. Put it toward closing costs, your down payment, or a lower rate.
See what you'd get backBased on a $1M San Diego home where the seller offers 3% to the buyer's agent. Applied to closing costs first. How much can go to you beyond that depends on your loan. Estimate only, not a guarantee.
Talk to a lender, no obligation
We'll connect you with a local lender. No obligation, no cost to talk. SelfCloze doesn't receive any fee from lenders.