JARGON MADE SIMPLE - BUY DOWN

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Real estate can feel overwhelming with all the acronyms and industry terms. Our Jargon Made Simple series breaks down complex concepts into clear, everyday language, so whether you’re buying or selling in Bend and Central Oregon, you can make confident decisions without the confusion.

What is a Buy Down?

Buy Down: A Shortcut to Lower Monthly Payments (At Least for a While)

If you’ve been exploring mortgage options, you may hear the term “buy down” come up especially in conversations about affordability. So what does it actually mean?

A mortgage buydown is when money is paid upfront to temporarily reduce your interest rate, resulting in lower monthly mortgage payments during the early years of the loan. That upfront cost can be paid by the buyer, or sometimes by the seller or builder as an incentive to help close the deal.

How a Buy Down Works

As mortgage loan instructor Mark Griffin explains: "There are two common types of buydowns, and understanding the difference is key."

1. Temporary Buy Downs

Temporary buydowns are exactly what they sound like, short-term relief at the beginning of your loan.

Common examples include:

3-2-1 Buydown
2-1 Buydown
1-0 (or 0-1) Buydown

With a temporary buydown, you pay money upfront to enjoy lower introductory payments for the first one, two, or three years of the loan. After that period ends, the interest rate returns to the original, full rate agreed upon in your mortgage.

This option can be especially helpful if you’re:

Managing moving costs or renovations
Expecting your income to increase
Wanting time to ease into homeownership financially

2. Permanent Buy Downs

A permanent buydown works differently. Instead of lowering the rate temporarily, you pay upfront points to reduce the interest rate for the entire life of the loan.

This means:

Lower monthly payments forever
No payment jump later
Often a good option for buyers planning to stay in the home long-term

Think of it as giving yourself a financial breather at the start.

The Bottom Line

A buydown doesn’t change the total loan amount, it changes when you feel the financial impact. Whether temporary or permanent, it can be a smart strategy when used intentionally and with a clear plan for the future.

If you’d like more guidance, You can reach out to Mark directly:

Mark Griffin

Advantage Mortgage

NMLS 114890

📧 [email protected]

All information deemed reliable but not guaranteed. If your property is listed with a real estate broker, this is not a solicitation of brokerage services. Avenir Admin, License , Avenir Realty.

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