What Is a Permanent Rate Buydown and Why Does It Matter Right Now?
By: Movement Team
octubre 7, 2026
Currently, 30-year mortgage rates are in the mid-7s* and it is affecting homebuyers monthly payments and overall affordability. But some are finding a way around it without waiting for rates to drop. The strategy uses something called a rate buydown.
Your interest rate determines your monthly payment. The higher the rate, the higher the payment. A rate buydown lowers that rate and by extension lowers your payment.
There are two types: temporary and permanent. They work differently and solve different problems.
*Optimal Blue
A temporary buydown lowers your interest rate for a defined period at the start of your loan, usually one to three years, then returns to the original rate for the remainder of the term.
A common structure is the 2-1 buydown. In year one, your rate is two percentage points below the original rate. In year two, it is one percentage point below. Starting in year three, you pay the full rate for the rest of the loan.
Temporary buydowns made more sense when there was a reasonable expectation that rates would fall significantly in the near term. The idea was that the lower payment in the early years would bridge the gap until a refinance became possible at a lower rate. In a market where rates are expected to stay elevated, that bridge may not lead anywhere in the timeframe most buyers are planning around.
A permanent buydown uses points paid at closing to reduce your interest rate for the entire life of the loan. The rate does not step back up. It stays lower from the first payment to the last.
One point equals one percent of the loan amount. Each point typically reduces the interest rate by a set amount, though the exact reduction depends on the lender and the loan. The more points paid at closing, the lower the rate.
On a $400,000 loan, buying down the rate by half a point can make a meaningful difference in the monthly payment. In situations where a seller is highly motivated, that reduction can be even greater. And because the rate is fixed for 30 years, that lower payment is not temporary. It is the payment for the life of the loan.
The trade-off is upfront cost. Points cost money at closing. That is where the current market comes in.
In buyer's markets like this one, seller concessions are common and sometimes expected. Sellers need to close deals. Builders need to move inventory. Both may be willing to contribute to a buyer's closing costs and points to make that happen.
A buyer can structure an offer that asks the seller or builder to fund the points. If the seller agrees, the buyer gets a permanently lower rate without paying for it out of pocket. The seller covers the upfront cost and the buyer benefits from a lower payment for the life of the loan.
This is a standard part of how concessions work, and in the current market, it is a realistic ask in most areas.
A buyer is purchasing a home and the rate available to them is in the mid-7s. Their loan officer runs the numbers on a permanent buydown. Buying the rate down to the high 5s requires a certain number of points at closing.
The buyer includes that amount as a seller concession in the offer. The seller agrees. At closing, the seller's proceeds cover the cost of the points. The buyer starts their loan with a rate in the high 5s, locked for 30 years.
If the buyer had accepted the mid-7s rate, their payment would be higher every month for the life of the loan. Instead, they used the seller's motivation to permanently solve the rate problem without spending anything extra at closing.
Not every seller will agree to fund points, and not every market has the same level of concession activity. If a seller says no, move on. In most markets, inventory is high enough that another listing is available. The goal is to find a motivated seller, submit a well-structured offer, and use their motivation to your advantage.
It is worth noting that a buyer can pay for points out of pocket to buy down their own rate. The math can work, but it means spending cash at closing that could otherwise go toward a down payment or reserves. When a seller funds the buydown instead, the buyer gets the same lower rate without touching their own savings. That is the more powerful version of this strategy, and in the current market, it is the one worth pursuing first.
A pre-approval is not just a formality. It is what tells a motivated seller that you are serious and can close. Buyers who come to the table with a strong pre-approval have more leverage to ask for concessions, including points, than buyers who are still figuring out their financing.
But the pre-approval is only part of it. The other piece is working with a loan officer who understands how to structure an offer to maximize what a seller will fund. That means knowing which loan products allow for seller-paid points and up to what limits, how to frame the concession request so it does not kill the deal, and how to model the buydown so the buyer can see exactly what their payment looks like before they sign anything.
A loan officer who does this well is not just processing paperwork. They are helping you build an offer strategy that uses the current market to your advantage.
The math on a permanent buydown depends on your loan amount, the rate you qualify for, and how many points are needed to move that rate. We can run those numbers for your specific situation and show you exactly what a permanent buydown would do to your monthly payment and the total cost over the life of the loan. Fill out the form below to get started.
Disclaimer : Any actual Seller Credit is paid at closing and is subject to interested party contribution limits. Actual (Seller/Builder) Credit amounts are agreed upon solely between the (Seller/Builder) and the Borrower(s).
Two Types of Buydowns
Your interest rate determines your monthly payment. The higher the rate, the higher the payment. A rate buydown lowers that rate and by extension lowers your payment.
There are two types: temporary and permanent. They work differently and solve different problems.
*Optimal Blue
Temporary Buydowns Can be Helpful, But in the Right Market
A temporary buydown lowers your interest rate for a defined period at the start of your loan, usually one to three years, then returns to the original rate for the remainder of the term.
A common structure is the 2-1 buydown. In year one, your rate is two percentage points below the original rate. In year two, it is one percentage point below. Starting in year three, you pay the full rate for the rest of the loan.
Temporary buydowns made more sense when there was a reasonable expectation that rates would fall significantly in the near term. The idea was that the lower payment in the early years would bridge the gap until a refinance became possible at a lower rate. In a market where rates are expected to stay elevated, that bridge may not lead anywhere in the timeframe most buyers are planning around.
A Permanent Buydown Lowers Your Rate for the Entire Loan Term
A permanent buydown uses points paid at closing to reduce your interest rate for the entire life of the loan. The rate does not step back up. It stays lower from the first payment to the last.
One point equals one percent of the loan amount. Each point typically reduces the interest rate by a set amount, though the exact reduction depends on the lender and the loan. The more points paid at closing, the lower the rate.
On a $400,000 loan, buying down the rate by half a point can make a meaningful difference in the monthly payment. In situations where a seller is highly motivated, that reduction can be even greater. And because the rate is fixed for 30 years, that lower payment is not temporary. It is the payment for the life of the loan.
The trade-off is upfront cost. Points cost money at closing. That is where the current market comes in.
In Buyer’s Markets, You Can Ask the Seller to Pay for It
In buyer's markets like this one, seller concessions are common and sometimes expected. Sellers need to close deals. Builders need to move inventory. Both may be willing to contribute to a buyer's closing costs and points to make that happen.
A buyer can structure an offer that asks the seller or builder to fund the points. If the seller agrees, the buyer gets a permanently lower rate without paying for it out of pocket. The seller covers the upfront cost and the buyer benefits from a lower payment for the life of the loan.
This is a standard part of how concessions work, and in the current market, it is a realistic ask in most areas.
Here Is What That Looks Like When It Works
A buyer is purchasing a home and the rate available to them is in the mid-7s. Their loan officer runs the numbers on a permanent buydown. Buying the rate down to the high 5s requires a certain number of points at closing.
The buyer includes that amount as a seller concession in the offer. The seller agrees. At closing, the seller's proceeds cover the cost of the points. The buyer starts their loan with a rate in the high 5s, locked for 30 years.
If the buyer had accepted the mid-7s rate, their payment would be higher every month for the life of the loan. Instead, they used the seller's motivation to permanently solve the rate problem without spending anything extra at closing.
What If a Seller Will Not Fund the Buydown?
Not every seller will agree to fund points, and not every market has the same level of concession activity. If a seller says no, move on. In most markets, inventory is high enough that another listing is available. The goal is to find a motivated seller, submit a well-structured offer, and use their motivation to your advantage.
It is worth noting that a buyer can pay for points out of pocket to buy down their own rate. The math can work, but it means spending cash at closing that could otherwise go toward a down payment or reserves. When a seller funds the buydown instead, the buyer gets the same lower rate without touching their own savings. That is the more powerful version of this strategy, and in the current market, it is the one worth pursuing first.
The Step That Can Make All of This Work Better
A pre-approval is not just a formality. It is what tells a motivated seller that you are serious and can close. Buyers who come to the table with a strong pre-approval have more leverage to ask for concessions, including points, than buyers who are still figuring out their financing.
But the pre-approval is only part of it. The other piece is working with a loan officer who understands how to structure an offer to maximize what a seller will fund. That means knowing which loan products allow for seller-paid points and up to what limits, how to frame the concession request so it does not kill the deal, and how to model the buydown so the buyer can see exactly what their payment looks like before they sign anything.
A loan officer who does this well is not just processing paperwork. They are helping you build an offer strategy that uses the current market to your advantage.
Find Out What This Looks Like for Your Situation
The math on a permanent buydown depends on your loan amount, the rate you qualify for, and how many points are needed to move that rate. We can run those numbers for your specific situation and show you exactly what a permanent buydown would do to your monthly payment and the total cost over the life of the loan. Fill out the form below to get started.
Disclaimer : Any actual Seller Credit is paid at closing and is subject to interested party contribution limits. Actual (Seller/Builder) Credit amounts are agreed upon solely between the (Seller/Builder) and the Borrower(s).
