Wondering if now is a good time to move? A rate buy down can make it work—lowering your payment and unlocking affordability in Florida’s market. With the right strategy, buyers save money and sellers attract stronger offers.
In this interview with Michelle Kattula, Senior Loan Advisor at Aequitas Mortgage Inc., we break down how rate buy downs and creative financing can make homeownership more affordable and help sellers attract more qualified buyers.
Watch the video to learn more or explore the highlightsin this article.
A rate buy down is a financing strategy that lowers your mortgage interest rate in exchange for an upfront cost. That cost can be paid by the buyer, the seller (as an incentive), or the lender (via premium pricing). When the rate goes down, your monthly payment goes down — which is why rate buydowns are so powerful in today’s market.
Want the basics on points? See the CFPB’s explainer on lender credits and discount points.
There are two ways to structure a rate buy down—permanent and temporary—and each lowers your monthly payment in a different way. Use the quick guide below to decide which fits your goals.
The following examples are for illustrative purposed only. Mortgage rules and guidelines can change without notice. The examples assume a $500,000, 30-year fixed loan and the note rates shown. Actual pricing, point cost, guidelines, and savings vary by lender and market conditions. Always get a written quote from your lender.
A permanent rate buy down uses “points” (prepaid interest) to lower your interest rate for the entire loan term. Typically, 1 point = 1% of the loan amount and might reduce the rate by ~0.25% (the exact reduction depends on market pricing).
Example (illustrative):
Loan: $500,000, 30-year fixed
Note rate: 7.00% → Payment ≈ $3,326/mo (principal & interest)
Buy 1 point ($5,000) to 6.75% → Payment ≈ $3,243/mo → $84/mo saved
Break-even: $5,000 ÷ $84 ≈ 60 months (~5 years)
When it shines:
You expect to own the home 5+ years (to pass the break-even).
You value payment stability over short-term savings.
What to consider:
If you sell or refinance before break-even, you may not fully recoup the upfront cost.
Always compare a permanent rate buy down vs. taking seller credits for other costs.
A temporary rate buy down lowers your payment for the first years, then it steps up to the full note rate. The cost is usually funded by the seller, builder, or lender and escrowed to subsidize your payments.
2-1 Buydown: Year 1 is 2% lower, Year 2 is 1% lower, then it returns to the note rate.
3-2-1 Buydown: Year 1 is 3% lower, Year 2 is 2% lower, Year 3 is 1% lower, then it returns to the note rate.
Illustrative example (loan $500,000, 30-yr, note rate 7.00%):
Standard payment ≈ $3,326/mo
2-1 buydown:
Year 1 at 5.00% ≈ $2,684/mo → ~$642/mo saved
Year 2 at 6.00% ≈ $2,998/mo → ~$329/mo saved
3-2-1 buydown:
Year 1 at 4.00% ≈ $2,387/mo → ~$939/mo saved
Year 2 at 5.00% ≈ $2,684/mo → ~$642/mo saved
Year 3 at 6.00% ≈ $2,998/mo → ~$329/mo saved
Why buyers like it:
Lower payments up front while income catches up or until you refinance.
Often seller-funded, so you keep your cash.
Guidelines:
Conventional and government loans allow temporary buydowns if structured correctly. Talk to your lender for more indormation.
For example, consider a $10,000 price cut vs. a $10,000 rate buy down on a $500,000 loan:
At 7.00%, cutting the price by $10,000 lowers the payment by ~$67/month.
A $10,000 rate buy down (structured as a 2-1) can reduce your payment by ~$642/month in Year 1 and ~$329/month in Year 2.
Therefore, if your goal is monthly affordability (and qualifying), the rate buy down usually wins — while the seller’s net proceeds can be similar.
Additionally, you can bundle a rate buy down with other tools for maximum impact:
Seller-paid closing costs to reduce cash-to-close.
Adjustable-Rate Mortgages (ARMs) when you plan to move/refi within a set timeline.
Down payment assistance & grants where eligible.
Assumable FHA/VA loans (case-by-case and subject to servicer/agency rules).
Piggyback HELOCs to avoid PMI.
Bridge loans for seamless move-up purchases.
Work with a local lender to stack options legally and efficiently.
One of the biggest mistakes buyers make in today’s market is sitting on the sidelines waiting for interest rates to drop. It feels logical—why not hold out for a lower rate and a better deal?
But here’s the reality: waiting often ends up costing you more.
As Michelle pointed out in our interview:
📈 Home prices are still rising, especially in desirable areas like Lakewood Ranch and Sarasota. Even if rates drop in 6–12 months, that home you loved may be $30,000–$50,000 more expensive by then.
🔁 When rates go down, buyer demand surges. We’ve seen it before: more buyers re-enter the market, and the competition ramps up. Suddenly, you’re back in multiple-offer situations, waiving inspections, paying over asking—and losing leverage.
💸 Refinancing is always an option. If you can afford the payment now with a creative financing strategy (like a temporary rate buy down), you can always refinance later when rates come down. That’s the “date the rate” part.
👉 The smarter play is to buy the right home now—at the right payment—and lock in equity before the next surge of buyer activity. Don’t let short-term rate fears stop you from making a long-term wealth-building decision.
In contrast to a price cut that saves buyers only a few dollars a day, a seller-paid rate buy down can reduce the payment by hundreds per month — and bring more qualified buyers through the door.
Use bold, benefit-driven headlines in your listing and social posts:
“Own for Less Per Month — Ask About Seller Credits!”
“Seller-Paid 2-1 Buydown — Lower Payments for Two Years!”
Result: You protect your net proceeds while making your home stand out, shortening days on market and avoiding future price reductions.
Rate buy downs and creative financing tools are underused but incredibly effective in today’s market. Whether you’re buying or selling, understanding these options could be the difference between a frustrating experience—or a winning deal.
🙋♂️ Need Help Crafting the Right Strategy?
I specialize in helping buyers and sellers navigate today’s market with confidence. Whether you’re looking to buy in Lakewood Ranch, Sarasota, or anywhere along the Florida Gulf Coast, let’s talk.
📆 Book your free home buying consultation:
👉 https://thevillageguruflorida.com/proven-buyer-process/
📩 Or email me directly: jeff@thevillageguruflorida.com
🧑💼 Connect with Michelle Kattula
Michelle Kattula
Senior Loan Advisor | Aequitas Mortgage Inc.
📞 586-383-3538
📧 mkattula@aequitasmortgage.com
📍 Licensed in FL, MI, TX