Buydown Mortgage

A method of getting a lower interest rate by making an upfront payment on a loan of a 1 or more “points.”  Discount points, or buydown points are equal to 1% of the loan amount.  In the case of a permanent buydown, each discount point bought lowers the interest rate by 0.125% over the life of the loan.  Many buydowns are structured as temporary interest rate reductions which are in place only for the first few years of a loan.