In this clip, we break down temporary buydowns, one of the most misunderstood tools in today’s mortgage market, and explain how options like a 2-1 buydown really work. We walk through the difference between temporary vs permanent mortgage buydowns, how a temporary buydown lowers monthly payments for the first one or two years, and why the interest rate always returns to the original note rate afterward.

We also explain why buyers are not allowed to pay for their own mortgage buydown, how seller credits and lender credits are used to fund temporary buydowns, and why paying for one yourself would simply mean paying your own payment in advance. You’ll learn how the 2-1 buydown structure works year by year, how payment reductions are calculated, and why temporary buydowns are often used in high interest rate environments to help buyers ease into higher mortgage payments.

00:00 Temporary Buydowns

00:44 Types of Buydowns Explained

02:18 Understanding the 2-1 Buydown

04:14 Cost Breakdown of Buydowns

05:23 Who Pays for the Buydown?

06:18 Practical Uses and Benefits

09:27 Closing