For home buyers
Temporary Buydown Loans in Michigan
A temporary buydown lowers your monthly payment for the first one to three years, paid from money set aside at closing, usually by the seller or a builder. The note rate on the loan does not change.
- No credit pull to talk
- Licensed mortgage broker, NMLS 2041154
Temporary Buydown Loan
Key benefits
Lower Initial Payments
A lower payment for the first one to three years.
A Gradual Step Up
The payment rises once a year until it reaches the full payment you qualified at.
Fixed-Rate Loans
It is set up on a fixed-rate loan, so every step up is known before you sign.
Third-Party Contributions
Often funded by seller, builder, or lender.
Temporary buydown against paying points
Both lower the payment. One does it for a couple of years using somebody else's money, the other does it forever using yours. They suit completely different situations.
| How it works | Temporary buydown | Permanent buydown (points) |
|---|---|---|
| Who usually funds it | The seller, or a builder, as a negotiated concession. Rarely the buyer. | The buyer, in cash at closing. |
| How long the relief lasts | One to three years, then the payment steps up to the note rate. | The life of the loan. |
| The rate you qualify at | The note rate, not the reduced one. Your borrowing power is unchanged. | The bought-down rate, which can help you qualify. |
| If you refinance or sell early | Unused escrow is usually credited toward the payoff. | The cash is spent. You recover it only by keeping the loan long enough. |
| Where the money sits | An escrow account funded at closing, drawn down monthly. | Paid to the lender at closing and gone. |
| Best used when | A seller is motivated and you can make the full payment once the buydown ends. | You are certain you will hold the loan for many years. |
Ask Samantha about a seller-paid buydown
Guidelines
Guidelines for this loan
What lenders usually check on a buydown. You still qualify at the full payment.
Credit Score
Set by the loan program and the lender; many conventional lenders look for 620 or higher.
Read the guideQualify at the Full Payment
The lender qualifies you at the full payment.
Read the guideBuydown Types
1-0, 1-1, 2-1 or 3-2-1 structures, depending on the loan program.
Read the guideEligible Loans
FHA, VA, and conventional loans.
Read the guideTemporary Buydown Calculator
A temporary buydown lowers the payment for the first years of the loan using money placed in escrow, most often by the seller. See the payment each year and what funding it costs.
The loan
The note rate does not change. An escrow account funded at closing covers the difference each month, and the payment steps up to the note rate once the buydown period ends.
About 1.5% of the price at Michigan’s statewide median homestead rate, the year after the sale. Get the published rate for an address
You qualify at the note rate, so the buydown lowers the payment without changing what you can borrow. If the loan is paid off or refinanced before the buydown ends, unused escrow funds are usually credited toward the payoff.
| Period | Rate | P & I | Paid from escrow |
|---|
- Total buydown cost
- $0
- Loan amount
- $0
- Taxes & insurance
- $0
- Year one total payment
- $0
The escrow account is funded at closing, most often by the seller as a negotiated concession.
Estimates only, for illustration. Not a loan commitment, an offer of credit, or a rate quote. Actual figures depend on underwriting, credit, income, assets, appraisal and property eligibility. Align Lending LLC, NMLS #2041154, is an independent mortgage broker and does not lend directly. Equal Housing Opportunity.
Official sources
Check the rules at the source
Program guidelines change. These are the official pages we check them against.
Questions about this loan
If yours is not here, ask it on the call. There are no dumb questions.
What is a 2-1 buydown in plain terms?
Your payment is figured at 2 percentage points below the note rate in year one and 1 point below in year two. The note rate itself does not change, and from year three you make the full payment.
Who pays for the buydown?
Most often the seller or builder, negotiated as part of your offer, and sometimes the lender. Whether you can fund it yourself depends on the loan program.
What happens when the buydown period ends?
Your mortgage payment adjusts to the original note rate.
Can I refinance before it steps up?
Only if you qualify for a new loan at the time, at the rates then available. Plan on making the full payment once the buydown ends; unused buydown funds are usually credited toward the payoff if you do refinance.
Can I use a buydown on any loan type?
It’s commonly offered on FHA, VA, and conventional fixed-rate mortgages.
Does Michigan change the buydown math?
It can stack two increases in the same year. On a 2-1 buydown the payment steps up in year two, and the year after you buy, the tax line moves too. The year after a Michigan home sells, its taxable value resets to half of the assessor’s market value, so the seller’s tax bill is not your tax bill. Estimate the tax for an address, then test the year-two payment with that bill in it.
What our clients say
Samantha Shelton is amazing!! She helped me get into my first home in Ferndale. The closing process was easy I was able to take care of everything without taking a day off of work. Being a first time homebuyer was stressful but she provided clear communication and true experience guidance throughout the entire process
Align Lending helped make purchasing my home in Madison Heights a smooth experience. I appreciated the regular updates and clear explanations along the way.
Can’t say enough great things about Samantha and her team at Align Lending! Highly recommend
Individual experiences. Results vary.
Ask Samantha whether this loan fits
Bring the offer you are writing. Samantha will show what a seller-paid buydown would cost and check that the full payment fits your budget once it ends.
- 1
Tell us what you are trying to do
Not what product you want. What you are actually trying to accomplish.
- 2
We look at your situation
Samantha works out what matters most for you specifically.
- 3
You leave with a plan
Your options, the tradeoffs, and your next step. No obligation to go further.
Start with your question
Talk it through firstAlign Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Program guidelines on this page are general and change over time; they are not a credit decision, a preapproval, a commitment to lend, or an offer of credit. Approval depends on your full application, the property and the lender's current guidelines.
