What is the main difference between temporary and permanent buydowns?

A temporary buydown subsidizes payments for a limited period while the note rate stays unchanged. A permanent buydown uses discount points to reduce the note rate for the life of the mortgage.

Is a temporary buydown always seller-paid?

No. Funding sources depend on program rules, but sellers and builders commonly fund temporary buydowns in purchase transactions.

Which buydown is better for a short timeline?

Permanent points are often harder to justify on a short timeline because the borrower may not recover the upfront cost. A temporary buydown still needs to be compared with alternative uses of the subsidy.

Buydown comparison

Temporary vs permanent mortgage buydowns

Temporary buydowns create early payment relief. Permanent buydowns trade more cash now for a lower rate over time. The better structure depends on who pays, your future payment comfort, and how long you expect to keep the loan.

Reviewed by LenderCity Editorial Mortgage Team · Updated July 27, 2026

Lenny's take

Choose a temporary buydown for transitional payment relief; choose permanent points only when the break-even fits your timeline.

Neither structure is automatically cheaper. A temporary buydown is often funded by a seller or builder and expires. Permanent points are an upfront cost tied to a lower note rate.

DecisionTemporary buydownPermanent buydown

Best suited forBorrowers expecting income growth or wanting early payment relief.Borrowers expecting to keep the mortgage beyond the calculated break-even.

Payment pathSteps up to the full note-rate payment.Lower scheduled payment from the beginning.

Primary riskThe future full payment may feel less comfortable.You may sell or refinance before recovering the upfront points.

What to compareTotal subsidy and the alternative use of seller funds.Points paid, monthly savings, and break-even months.

When a temporary buydown can make sense

A permitted seller or builder is paying without raising the price beyond the home's supportable value.
You can afford the full note-rate payment when the temporary subsidy ends.
The subsidy is more useful than an alternative concession, such as closing-cost help.
The loan program and transaction permit the structure.

When permanent points can make sense

The monthly savings are meaningful and documented on comparable Loan Estimates.
You have enough cash left after closing for reserves and near-term priorities.
Your expected holding period is comfortably longer than the break-even.
You are not likely to refinance before recovering the upfront cost.

Compare both without being misled

Use the full note-rate payment for the temporary buydown and calculate the points break-even for the permanent option. Then compare the same loan amount, term, product, lock period, and lender-controlled fees. A low introductory payment and a low permanent rate answer different questions.

Use your numbers

Move from explanation to comparison.

Lenny can analyze a Loan Estimate or compare matched rate offers using the same cost-and-timeline logic.

Analyze an offer Compare matched rates

Official sources

Educational guidance only. Examples are hypothetical and do not include every loan cost or program rule. Final terms, pricing, eligibility, and disclosures must be confirmed by a licensed mortgage lender. Reviewed July 27, 2026.