A temporary buydown subsidizes scheduled mortgage payments for an initial period. The mortgage note rate does not change. Understand the full payment after the subsidy ends and compare upfront costs.
Separate a temporary subsidy from a permanent rate reduction
Temporary buydown funds cover part of scheduled payments under the agreement. Paying discount points to reduce a note rate is a different structure. Ask for a side by side comparison rather than treating both as the same offer.
Budget for the full payment
Look at principal and interest at the note rate, plus taxes, insurance, mortgage insurance, and any association costs. Taxes and insurance can change independently of a buydown schedule. Do not make affordability depend on an assumed refinance.
Read the funding and payoff terms
Ask who funds the buydown, which seller or other contribution limits apply, and how unused funds are handled if the loan is paid off early. The applicable agreement and servicing rules control the outcome.
Bring these questions to the conversation
- Payment schedule during and after the subsidy
- Total upfront cost and who pays it
- Qualification at the applicable required payment
- Treatment of unused funds under the agreement