Seller Concessions & Buydowns
Maximum Seller Concessions Comparison
| Mortgage Type | Property / Occupancy Type | Down Payment | Max Concession Limit |
|---|---|---|---|
| Conventional | Primary or Secondary Home | Less than 10% | 3% of purchase price |
| Conventional | Primary or Secondary Home | 10% to 25% | 6% of purchase price |
| Conventional | Primary or Secondary Home | Greater than 25% | 9% of purchase price |
| Conventional | Investment Property | All | 2% of purchase price |
| FHA Loan | Primary Residence | 3.5% or more | 6% of purchase price |
| VA Loan | Primary Residence | 0% (No down payment) | 4%(normal closing costs un-capped; specific concessions/debt payoff capped) |
| USDA Loan | Primary Residence | 0% (No down payment) | 6% of purchase price |
How It Works
A temporary buydown lowers your interest rate drastically for the first 1 to 3 years of the mortgage. The upfront fee is placed into an escrow account and used to subsidize your payments during those early years. After the temporary period ends, the loan reverts to its full, permanent rate. [ 1, 2, 3, 4]
The most common structures include:
| Buydown Type | Year 1 Rate | Year 2 Rate | Year 3 Rate | Year 4+ Rate |
|---|---|---|---|---|
| 3-2-1 Buydown | 3% lower | 2% lower | 1% lower | Full Standard Rate |
| 2-1 Buydown | 2% lower | 1% lower | Full Standard Rate | -- |
| 1-0 Buydown | 1% lower | Full Standard Rate | -- | -- |
Buydown Calculator
Monthly Payment:
| Year | Rate | Payment (Principal & Interest) | Monthly Savings | Annual Savings |
|---|
Buydown Cost
