{"id":56119,"date":"2026-03-13T02:00:55","date_gmt":"2026-03-13T09:00:55","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=56119"},"modified":"2026-03-13T22:06:43","modified_gmt":"2026-03-14T05:06:43","slug":"buying-down-interest-rate","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buying-down-interest-rate\/","title":{"rendered":"A Seller\u2019s Guide to Buying Down the Interest Rate for Buyers"},"content":{"rendered":"

If you\u2019re finding it difficult to sell your home in the current market, buying down the interest rate for buyers may be a solution. By helping reduce the buyer\u2019s loan rate \u2014 at least temporarily \u2014 you can make your property more attractive without lowering your asking price.<\/p>\n

With insights from a top expert, this guide will show you how seller-paid buydowns work, how much it may cost you, and when it makes sense to consider offering this concession<\/a> to close a deal.<\/p>\n

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Ask a Top Agent if You Should Offer a Rate Buydown<\/h3>\n

Sellers can often retain more proceeds by offering a buyer an interest rate buydown rather than lowering their home’s sale price. A top agent can determine which strategy is best for your situation. Our free Agent Match tool analyzes over 27 million transactions and thousands of reviews to find you a trusted, experienced local agent.<\/p>\n \n

\n Step 1: Talk to an Expert<\/a>\n <\/div>\n <\/div>\n<\/div>\n\n
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What is a seller-paid interest rate buydown?<\/h2>\n

\u201cIn simple terms, a seller-paid interest rate buydown is when the seller contributes funds to lower the buyer’s mortgage rate, which results in lower monthly payments for the buyer,\u201d says Denise Madan<\/a>, a Miami-based HomeLight Elite agent with 27 years of experience helping sellers.<\/p>\n

This strategy can be especially effective in a slower market where buyers are feeling stretched by high rates and prices. Instead of lowering your home\u2019s sale price, which can reduce your net proceeds<\/a>, you\u2019re offering a benefit that directly addresses buyers\u2019 monthly payment concerns, especially in the early years of the loan.<\/p>\n

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How does buying down the interest rate work?<\/h2>\n

When a buyer pays for an interest rate buydown on their own mortgage loan<\/a>, the upfront discount points each typically cost 1% of the loan amount and can lower the rate by a fraction of a percentage, usually about .25%. However, when a seller offers a buydown as a buyer incentive<\/a>, it’s typically in the form of a credit at closing.<\/p>\n

The funds you contribute as a seller are used to subsidize the difference between the original interest rate and the reduced rate during the buydown period. Lenders typically require that this money be placed in an escrow account to cover the buyer\u2019s adjusted payments. (We\u2019ll illustrate this in a minute.)<\/p>\n

Temporary and permanent rate buydowns<\/h3>\n

A rate buydown can be structured in two main ways: temporary or permanent. Both approaches lower the interest rate but differ in how long the reduced rate lasts and how much the buydown costs.<\/p>\n

\u201cA temporary buydown reduces the interest rate for the first couple of years before it returns to the original rate,\u201d Madan explains. \u201cThere is a 2-1 buydown, which means the interest rate is reduced by 2% in the first year and 1% in the second year.\u201d<\/p>\n

2-1 buydown interest rate example:<\/h3>\n