How a Rate Buy Down Can Save You Hundreds on Your Monthly Mortgage Payment

Let’s talk about one of the most effective ways to make buying a home more affordable right now — even with today’s interest rates — and that’s through a rate buy down.

A lot of buyers still feel rates are high, but the good news is there are creative strategies we can use to help lower your monthly payment and get you into the home you want.

What Is a Rate Buy Down?

A rate buy down is when you (or the seller) pay a small upfront amount at closing to permanently lower your interest rate.

Here’s how it works:

• One point equals 1% of your loan amount.

• Each point typically lowers your rate by about 0.25%.

Example: How Much Can You Save?

Let’s say you’re buying a $400,000 home with 5% down — that means your loan amount is about $380,000.

• At today’s average rate of 6.4%, your principal and interest payment would be around $2,340/month.

• If we bought that rate down by 0.5% to 5.9%, it would take around 2 points to do so — but your payment would drop to about $2,220/month, saving you roughly $120 every month.

• If we went further and bought the rate down a full 1% to 5.4% (around 4 points), your monthly payment could be closer to $2,100 — a savings of about $200 per month.

That’s real money back in your pocket every month — and over the course of a year, that adds up.

Who Pays for the Buy Down?

The great news is that more sellers today are open to offering a rate buy down as part of the negotiation — especially if it helps their home stand out and sell faster.

You can also choose to pay for it yourself as part of your closing costs, or in some cases, your lender can contribute through a pricing credit.

Just note: the buy down can’t be rolled into the loan — it has to be paid upfront at closing.

Why It Matters Right Now

In a market where affordability is top of mind, a rate buy down is one of the smartest strategies buyers can use. It allows you to take control of your monthly payment, strengthen your buying power, and make your dream home more within reach.