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Mortgage Glossary

Buydown

Mike Starr·Reviewed August 2026

A mortgage buydown is a financing technique where the borrower (or seller) pays extra upfront to reduce the interest rate. A permanent buydown lowers the rate for the life of the loan. A temporary buydown (such as a 2-1 buydown) reduces the rate for the first 1 or 2 years, then returns to the original rate.