Unlocking Affordable Homeownership with Lender-Paid Buydowns


For those looking to buy a home, understanding the various mortgage options can feel overwhelming, especially in today’s ever-evolving real estate market. However, it’s essential to explore all the tools and options available to make the best decision for your future. One fantastic loan program that is gaining popularity among homebuyers is the Lender-Paid Buydown. Not all lenders offer this, but BankSouth Mortgage does! This program is a great way for buyers to enjoy lower monthly payments for the first year and ease their way into their new mortgage.

So, what exactly is a Lender-Paid Buydown, and how can it benefit you as a borrower? Let’s dive in.

Understanding Lender-Paid Buydowns

A Lender-Paid Buydown is a home financing option that helps you secure more affordable loan payments during the first year of owning your new home. Here’s how it works:

During the first year of your mortgage, your monthly payments will be calculated based on an interest rate that’s 1% lower than the rate you’ll have for the remainder of the loan, which spans 30 years. This means you’ll enjoy more affordable payments for the initial 12 months in your new home, giving you a valuable financial cushion as you settle in. Importantly, the interest rate for years 2 through 30 is determined by current market rates and remains fixed for the duration of the loan. What sets the lender-paid buydown apart is that the lender covers the cost of this temporary interest rate reduction, sparing the buyer or seller from having to contribute any additional funds at closing to make it happen. It’s a win-win situation that can significantly ease the financial responsibility of homeownership in its early stages.

The Benefits for Borrowers

Now, let’s explore how a Lender-Paid Buydown can work to your advantage:

  1. Lower Interest Rates: In a time when interest rates are higher than recent history, the Lender-Paid Buydown offers a welcomed solution. With a lower interest rate for the first year of the mortgage, you reduce the amount of interest you pay initially, making your home purchase more cost-effective.
  2. Significant Savings: The reduced interest rate in the initial year translates to lower monthly payments, leaving you with extra funds that can be directed toward home-related expenses, savings, or investments, helping you adapt to the financial responsibility of homeownership with greater ease.
  3. Affordable Homeownership: A Lender-Paid Buydown with lower initial payments can make homeownership more accessible, especially if you’re on a tight budget or concerned about the costs of moving into your new home. It’s a practical way to get your foot in the door of the real estate market.
  4. Predictable Payments: Predictability is key in budgeting. The stability of fixed interest rates offered through a Lender-Paid Buydown ensures no surprises, providing peace of mind as you manage your finances.
  5. Customized Options: Borrowers need options to meet their unique financial circumstances. A Lender-Paid Buydown offers flexibility, ensuring that your mortgage suits your specific needs and goals.
  6. Future Flexibility: Lower initial payments can free up your finances for other goals, such investing in home improvements, decorating and furnishing your new house, or simply having extra funds for unexpected expenses. This flexibility provides you with the financial freedom to adapt to changing needs and opportunities as they arise, making your homeownership experience more accommodating and fulfilling. Plus, when rates decrease in the future, you may have the option to refinance with our No Lender Fee Refinance* creating a perfect blend of alleviating today’s pain point (high interest rates) while ensuring you don’t miss out on homeownership.

The Bottom Line

A Lender-Paid Buydown is a powerful program to make homeownership more accessible and affordable. As a borrower, it’s essential to explore your options and make informed decisions that suit your financial goals and aspirations.

To learn more about how a Lender-Paid Buydown can work for you or to get started on your journey to affordable homeownership, please reach out to one of our experienced loan officers. We’re here to guide you through the process, answer your questions, and help you explore the best financing options for your unique situation.

Don’t let high interest rates hold you back from achieving your dream of homeownership. Take advantage of our Lender-Paid Buydown and experience the many benefits it has to offer. Your path to affordable homeownership starts here!

Ready to take the next step? Apply now to secure your mortgage with a lender-paid buydown and enjoy the benefits it offers.


“No Lender Fees” only applies to origination charges. Available for new applications on or after 6/15/2023. Must refinance within 5 years of the close date.

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