Buy-Down

Buydown refers to a mortgage financing technique in which the buyer attempts to obtain a lower mortgage interest rate for the first few years of the term length. In some cases, the buyer may be able to acquire the lower interest rate for the entire life of the loan. There are several types of buydown techniques. The most common is a 2-1 buydown, which helps save the homebuyer on interest for the first two years of their loan. Some buydowns can use a 3-2-1 structure as well.