Discount points, lender credits and buydowns, weighed on your own numbers
Temporary buydowns
Point made
A temporary buydown lowers your payment for an initial period using money placed in a fund at closing, often by a seller or builder. After the period ends, the payment rises to the full note rate. Under Fannie Mae's guide you must qualify at the note rate, so the buydown does not raise how much you can borrow.
Last reviewed against the primary sources listed below.
Points versus a temporary buydown
| Discount points | Temporary buydown | |
|---|---|---|
| Lowers the rate | For the whole loan | Only at the start |
| Who often pays | Borrower | Seller or builder |
| Qualifying payment | At the lower rate | At the full note rate |
Points and credits, answered
What happens when a temporary buydown ends?
The payment steps up to the amount based on the full note rate written in your loan documents.