Seller-Paid Buydown

In a seller-paid buydown, the seller contributes funds at closing to reduce your interest rate — either temporarily for the first year or two, or for the life of the loan, depending on how it's structured. It's a negotiating tool that can make a home more affordable without changing the purchase price.

Generally a good fit if you...

• Are negotiating with a motivated seller who has room to offer concessions
• Want a lower payment, at least in the early years of the loan
• Are buying in a market where seller concessions are realistic

General guidelines

• Temporary buydowns: common structures reduce your rate for the first 1–2 years before stepping up to the permanent note rate
• Permanent buydowns: funds are used to reduce the rate for the entire loan term instead
• Funding: paid for by the seller (or sometimes the builder) as a negotiated concession, not out of your pocket