Lower your initial housing costs with buydown options

Our 2-1 Buydown and 3-2-1 Buydown programs help you reduce your interest rate — and lower your monthly housing payment — in the first two to three years of your loan!

What is a Buydown?

A buydown helps make home ownership more affordable by reducing your interest rate during the first two to three years of your loan. For example, a 3-2-1 Buydown eases you into your new home payments by reducing your effective interest rate by 3% in your first year of ownership, 2% in your second year, and 1% in year three. Comparatively, a 2-1 Buydown reduces your interest rate by 2% in the first year and 1% in year two.

Benefits of a Buydown

  • Buy a home with confidence, knowing you’ll enjoy a lower monthly payment during your first two to three years of home ownership.
  • Free up your cash flow to personalize your new home or save money.
  • Protect yourself from rising rates.

How Does a Buydown Work?

  1. Make an offer on a single-family primary or secondary home.
  2. Take out a conventional (including high balance) or HomeReady 30-year fixed-rate loan.
  3. At closing, the seller deposits escrow funds equal to the difference between your permanent 30-year fixed payment and the reduced payments that will be in effect for the loan’s first two to three years.
  4. Each month, a small portion of the funds is released from the account and applied to your mortgage payment.
  5. Your effective interest rate is reduced by 3% in the first year, 2% during the second year, and 1% in the third year (3-2-1 Buydown), or 2% the first year and 1% the second (2-1 Buydown).