Mortgage Programs
Temporary Buydowns
Discover how Temporary Buydowns can make home ownership more affordable by reducing your mortgage payments in the early years of the loan.
Minimize Initial Costs With Temporary Buydowns
Temporary buydown mortgages can be a useful option for borrowers who want to minimize their initial mortgage payments. This can be a helpful financing tool in a higher rate environment.
In a temporary buydown, the effective interest rate that a borrower pays during the early years of the mortgage is reduced as a result of the deposit of a lump sum of money (sometimes called a “subsidy”) into a buydown account. Each month, a portion of the subsidy account is released to reduce the borrower’s payments during the buydown period. The subsidy is provided by the seller and is typically offset by an increase in the purchase price of the home.
Advantages of Temporary Buydowns
Temporary buydowns can be advantageous for buyers in certain circumstances:
- Buyers interested in a home with a motivated seller
- Buyers anticipating a rapid rise in their household income
- There is a possibility that they plan to sell the home shortly after the buydown period ends
- To save money on interest payments
Example
Buydown Scenarios
GRB offers a number of buydown options to meet the needs of homebuyers, including a 3-2-1, 2-1, and 1-0 temporary buydown.
Take a closer look at what a temporary buydown could mean using the provided loan parameters.
All outcomes are displayed below:
| Loan Amount | $200,000 |
|---|---|
Interest Rate (Annual) |
7.750% |
Annual Percentage Rate (APR) |
7.943% |
Loan Period (in years) |
30 years |
Monthly Payments |
$1,146.26 |
Total Payments |
360 |
Temporary Buydown
3-2-1* Temporary Buydown Scenario
Interest Rate |
Note Payment |
Actual Payment |
Monthly Subsidy |
No. of Payments |
Annual Subsidy Payments | |
|---|---|---|---|---|---|---|
Year 1 |
5.750% |
$1,146.26 |
$1,037.76 |
$212.54 |
12 |
$2,550.48 |
Year 2 |
6.750% |
$1,146.26 |
$933.72 |
$108.50 |
12 |
$1,302.00 |
BUYDOWN COST: $7,591.92
YEAR | Interest Rate | Note Payment | Actual Payment | Monthly Subsidy | No. of Payments | Annual Subsidy Payments |
|---|---|---|---|---|---|---|
1 |
4.750% |
$1,146.26 |
$834.60 |
$311.62 |
12 |
$3,739.44 |
2 |
5.750% |
$1,146.26 |
$933.72 |
$212.54 |
12 |
$2,550.48 |
3 |
6.750% |
$1,146.26 |
$1,037.76 |
$108.50 |
12 |
$1,302.00 |
Temporary Buydown
2-1* Temporary Buydown Scenario
Interest Rate |
Note Payment |
Actual Payment |
Monthly Subsidy |
No. of Payments |
Annual Subsidy Payments | |
|---|---|---|---|---|---|---|
Year 1 |
5.750% |
$1,146.26 |
$1,037.76 |
$212.54 |
12 |
$2,550.48 |
Year 2 |
6.750% |
$1,146.26 |
$933.72 |
$108.50 |
12 |
$1,302.00 |
BUYDOWN COST: $3,852.48
YEAR | Interest Rate | Note Payment | Actual Payment | Monthly Subsidy | No. of Payments | Annual Subsidy Payments |
|---|---|---|---|---|---|---|
1 |
5.750% |
$1,146.26 |
$933.72 |
$212.54 |
12 |
$2,550.48 |
2 |
6.750% |
$1,146.26 |
$1,037.76 |
$108.50 |
12 |
$1,302.00 |
Temporary Buydown
1-0* Temporary Buydown Scenario
Interest Rate |
Note Payment |
Actual Payment |
Monthly Subsidy |
No. of Payments |
Annual Subsidy Payments | |
|---|---|---|---|---|---|---|
Year 1 |
6.750% |
$1,146.26 |
$933.72 |
$108.50 |
12 |
$1,302.00 |
BUYDOWN COST: $1,302.00
* The examples above are meant for educational purposes only and does not include taxes, insurance and other fees. The stated rate is an interest rate. While every effort has been made to ensure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates, terms, programs, and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to credit requirements and underwriting approval. Interest rates subject to change. Please contact a GRB Mortgage Originator for complete financial information on temporary buydowns and other mortgage products.
Take a Look at GRB's Lender-Funded RateRelief+ Buydown Program
GRB also offers a 1-0 lender-funded buydown to help reduce payments in the first year of the loan. Go to our RateRelief product page or contact a GRB Mortgage Originator to see if a buydown can work for you.
Contact Our Mortgage Team
Click the button below to fill out our ‘Contact Us’ form, and a GRB Mortgage Originator will be in touch to answer your questions!