What is a Temporary Buydown?

A temporary buydown is an upfront interest payment that lowers the interest on a fixed-rate mortgage for the first or second year of the mortgage, after which the interest rate reverts to the full note rate for the remainder of the loan.

 

Benefits:

• Lower initial monthly payments

• Increased affordability

• Easier transition into ownership

• Helps offset higher interest rate environments

• Can be funded through seller concessions

 

Available on: FHA, VA, Conventional (FNMA), USDA, Non-QM

 

Available Buydown Structures: 2-1 Buydown and 1-0 Buydown

 

Agency requirements: 580 minimum Fico

 

NQM Requirements:

680 minimum FICO

• Max LTV: 80%

• Max DTI: 50%

• 30-year fixed only

• 2-1 buydown only

 

2-1 buydown: The 2-1 buydown reduces the buyer’s interest rate by 2% for the first year of their loan and 1% for the second year.

 

1-0 buydown: The 1-0 buydown reduces the buyers interest rate by 1% for the first year of their loan.