What is a mortgage rate buydown, and is it worth it?

Temporary buydowns cut the payment in the early years, then step up: a 2-1 buydown lowers the rate by 2 percentage points the first year and 1 point the second, then reverts to the full note rate. The difference is funded by money deposited in a buydown escrow account, almost always paid by the seller or builder, and the buyer still qualifies at the full note rate. Permanent buydowns are discount points: one point costs 1 percent of the loan amount and typically lowers the rate about 0.25 percentage points for the life of the loan, with a break-even around five years, so they only pay off for buyers who stay long enough. Builders in the Inland Empire regularly advertise these offers: one area builder has offered up to $60,000 in closing-cost credit or a permanent rate buydown, and a national builder's 2026 Inland Empire promotions sold select homes with promotional rates in the low 4 percent range through paid points. About 60 percent of U.S. builders use financing incentives, and the offers rotate weekly and tie to the builder's preferred lender, so current numbers must be verified for each community. A buydown makes sense when the upfront cost is covered and you plan to stay through the break-even. Julian Cesar decodes builder buydown offers so you compare the real payment, not the headline rate.