RED HOT HOME SALE GOING ON NOW

I WANT $30K*!
Open 7 Days a Week 9AM – 8PM (208) 391-5545
chevron left Back to Blog

Mortgage Rate Buydown: A Smart Way to Lower Your Payments

Buying your first home can feel overwhelming—especially when mortgage rates are higher than you expected. One way to ease the financial pressure is through a mortgage rate buydown, which can temporarily or permanently lower your interest rate and monthly payments.

What Is a Mortgage Rate Buydown?

A rate buydown is an upfront payment (sometimes covered by a builder, seller, or lender) that reduces your mortgage interest rate. This helps you save money during the first few years—or even over the life of your loan.

How Does a Rate Buydown Work?

There are two main types:

Temporary Rate Buydown (2-1 Buydown)

  • Year 1: 2% lower rate
  • Year 2: 1% lower rate
  • Year 3 onward: Standard rate applies

Example: If your mortgage rate is 6.5%, you’d pay 4.5% the first year, 5.5% the second year, and then the full 6.5% starting year three.

Temporary buydowns are common with new construction homes—builders often offer them as a buyer incentive.

Permanent Rate Buydown
Here, you pay mortgage discount points upfront to permanently reduce your rate. Example: On a $400,000 loan, paying 2 points ($8,000) could lower your rate from 6.5% to 6.0%, saving thousands in interest over time.

Who Pays for the Buydown?

  • The homebuyer (you can pay at closing)
  • The home builder (common in new construction)
  • The seller (as a way to attract buyers)
  • The lender (as part of a promotional offer)

Pros & Cons of a Mortgage Rate Buydown

Benefits:

  • Lower initial monthly mortgage payments
  • Helps you qualify for more home
  • Builder- or seller-paid buydowns reduce your upfront costs

Drawbacks:

  • Requires upfront investment if you’re paying
  • Not ideal if you sell or refinance too soon

You must calculate the breakeven point

Is a Rate Buydown Right for You?

A buydown makes sense if you’re:

  • A first-time homebuyer needing lower initial payments
  • Planning to stay in your home long enough to benefit
  • Buying new construction with builder incentives

Always compare the upfront cost vs. monthly savings, and ask your lender how long it takes to break even.

FAQ: Common Questions About Mortgage Buydowns

1. Is a mortgage buydown the same as paying points?
Not exactly. Temporary buydowns lower payments for a set time, while points permanently lower your interest rate.

2. Can I refinance after a buydown?
Yes, but consider if it makes financial sense based on your breakeven timeline.3. Are 2-1 buydowns worth it in 2025?
They can be if rates are high now but expected to drop, giving you short-term relief before refinancing.

Final Thoughts

A mortgage rate buydown can make homeownership more affordable—especially for first-time buyers or those purchasing new construction. Before deciding, talk to your lender about costs, savings, and how long you plan to stay in the home.

Keep Reading

A rider carrying a large American flag gallops across the dirt arena at the Caldwell Night Rodeo, with a packed grandstand of spectators cheering in the background during sunset.

CBH Hearts Across the Valley: Caldwell Night Rodeo

We’re thrilled to bring our next Hearts Across the Valley installation to Caldwell! We’ve teamed up with the incredible Caldwell Night Rodeo to celebrate community, creativity, and connection. This longstanding…

Read More
Woman with long blonde hair lies on grass surrounded by red and white beach balls, smiling and holding heart-shaped sunglasses that read "CBH Homes."

CBH Homes Promotions & Discounts – Save on New Homes in Idaho

At CBH Homes, we believe that everyone deserves a place to call home, and we’re here to help make that happen. Whether you’re buying your first home, upgrading to a…

Read More
A lively fairground at sunset with a large Ferris wheel as the main attraction. The sky is filled with vibrant orange and yellow clouds. People are walking around, enjoying games and rides, and there are colorful tents and booths, including one with large stuffed toys on display.

CBH Homes Hearts Across the Valley Comes to Garden City: Don’t Miss the Unveiling at Expo Idaho!

Coming August 22nd, 2025!Join CBH Homes and the Western Idaho Fair for a heartwarming community event you won’t want to miss! CBH Homes Unveils “FAIRever Yours” Heart Sculpture at Expo…

Read More
Stay Connected

We’re here for you!

Be the first to get updates about new homes, specials, events (think free* food trucks + much, much more), giveaways, and beautiful home design tips.

Don't miss out!

  • This field is for validation purposes and should be left unchanged.