Mortgage & Financing · August 19, 2026 · 8 min read
Last Tuesday I sat across the kitchen island from a couple in Bel Air—pre-approved, solid credit, eyeing homes for sale in Harford County in the low $400s. Their lender had quoted 6.67% and mentioned they could "buy the rate down to 6.25% for about two points."
They nodded politely. They had no idea what that meant in dollars or whether it made sense.
I asked, "Did your lender mention a temporary buydown?"
Blank stares.
That's the gap I want to close today. Most buyers hear about permanent rate buydowns—paying points upfront to lower your rate for the life of the loan. Fewer hear about 2-1 or 1-0 buydowns, where you (or the seller, or the builder) subsidize a lower rate for the first year or two, then it steps up to the note rate. Both tools have a place. But if your lender only pitches one, you're not getting the full menu.
I spent two decades in education before I became a Maryland REALTOR®, so I teach this stuff at the kitchen table, not in jargon. Let's break it down.
When you hear "buying down the rate," this is usually what lenders mean. You pay discount points—each point is 1% of your loan amount—to permanently reduce your interest rate.
Example:
$400,000 loan at 6.67%.
One point ($4,000) might drop the rate to 6.42%.
Two points ($8,000) might get you to 6.17%.
The math question is simple: how long until your monthly savings pay back the upfront cost? If you save $85/month and paid $4,000, you break even in 47 months. If you plan to stay in the home (or keep that loan) longer than that, you win. If you refinance in two years or sell in three, you lose.
Right now, with rates hovering in the mid-6s according to Freddie Mac's Primary Mortgage Market Survey, a lot of Maryland and DC buyers are assuming they'll refinance the moment rates drop. That makes a permanent buydown less attractive. But if you're buying your forever home in Cecil County or Anne Arundel County and you genuinely plan to stay put, the math can work beautifully.
I always tell clients: run the break-even. Your lender should give you a loan estimate that shows the new rate, the cost, and the monthly payment side by side. If they won't, ask me and I'll walk you through it or connect you with someone who will.
Here's where it gets interesting—and where a lot of lenders go silent unless you ask.
A 2-1 buydown means:
A 1-0 buydown means:
The subsidy is paid upfront—either by you, the seller (as a concession), or the builder (common in new construction). The lender holds those funds in escrow and applies them to reduce your payment in years one and two.
Why would anyone do this?
Three reasons I see all the time:
Affordability ramp. Maybe you're expecting a raise, a bonus structure to kick in, or a spouse to return to work after parental leave. A 2-1 buydown gives you breathing room in the early years when cash is tight.
Seller or builder concession. In a cooling market—like we're seeing in parts of Maryland where 42% of listings have taken price cuts—a motivated seller might offer $8,000 toward your closing costs. You can use that to fund a 2-1 buydown instead of pocketing it as a credit. The builder I worked with in York County, PA, last month offered a 2-1 buydown standard on all contracts. It's a sales tool for them, a real savings for you.
Qualification edge. Lenders qualify you based on the note rate, not the temporary lower rate, so this doesn't artificially inflate your buying power. But psychologically, knowing your first-year payment is $350/month lower can make a stretch home feel manageable.
Back to my Bel Air clients.
$420,000 purchase price.
$336,000 loan (they put 20% down).
Note rate: 6.67%.
The seller agreed to a $10,000 credit toward closing costs as part of the negotiation.
We had options:
They chose Option C.
Year-one payment (principal + interest): roughly $1,730.
If they'd taken the note rate from day one: $2,135.
Monthly savings in year one: ~$405.
Year-two savings: ~$200/month.
Total subsidy cost: about $8,400 (held in escrow, drawn down monthly by the lender). They pocketed the remaining $1,600 as a closing-cost credit.
Why did they pick this? The husband's new job includes a performance bonus that kicks in after 12 months. They wanted the cushion now and were comfortable with the step-up later. And honestly, they're betting rates drop and they'll refinance in 24 months anyway.
I don't know if that bet pays off. Neither do they. But they made an informed choice, and that's my job as a Maryland REALTOR®—to make sure they see all the plays, not just the ones the lender defaults to.
If you're already comfortable with the payment at the note rate, don't overthink it. A temporary buydown is a tool, not a requirement.
It also doesn't help if you're scraping together every dollar for the down payment and closing costs. The subsidy has to be funded somehow—either the seller gives it to you, the builder bakes it into the deal, or you pay it yourself. If you're paying it yourself and cash is tight, a permanent buydown or no buydown at all might be smarter.
And if you're buying in a hot pocket—say, parts of Howard County or Montgomery County where sellers still have leverage—good luck getting a $10,000 concession. You're more likely to see temporary buydowns when inventory is climbing and sellers need a sweetener. That's the market we're in right now across much of Maryland, DC, Pennsylvania, and Delaware.
Most loan officers are good people doing hard jobs. But they're also busy, and if you don't ask, they may not volunteer every option.
Try this:
"I know you quoted me a rate of X%. Can you show me what a 2-1 buydown would cost, and what my payments would look like in years one, two, and three? And can we compare that to buying the rate down permanently with points?"
If they hesitate or say "we don't do that," find another lender. Every major lender—and most local credit unions and mortgage banks—can structure a temporary buydown. It's a standard product. Fannie Mae and Freddie Mac both allow it. HUD's guidelines explicitly permit seller-paid buydowns on FHA loans.
If you're working with me as your Harford County REALTOR®, Baltimore County REALTOR®, or anywhere else in my licensed footprint (Maryland, DC, Pennsylvania, Delaware), I'll make sure the question gets asked. I've done this enough times that I can sketch the math on a napkin before we even call the lender.
We've seen mortgage rates tick up to 6.67% recently, and buyer urgency has cooled in response. At the same time, inventory is creeping up and price cuts are climbing. That's a recipe for negotiation leverage.
If you're shopping for homes for sale in Cecil County, Anne Arundel County, Prince George's County, or Baltimore City, this is a smart time to ask sellers for concessions—and to think creatively about how to deploy them. A 2-1 buydown might be the edge that makes a $450,000 home feel like a $420,000 home for the next two years.
And if you're looking at new construction—especially in York County, PA, or New Castle County, DE, where builders are sitting on spec inventory—don't be shy. Ask what they'll offer. I've seen builders cover the entire cost of a 2-1 buydown just to get a contract signed before month-end.
If you're a first-time buyer, Maryland has programs that stack beautifully with buydowns. The Maryland Mortgage Program offers below-market rates and down payment assistance. I wrote about a hidden MMP rule that trips up first-time buyers recently—it's worth a read if you're new to this.
Pennsylvania and Delaware have similar programs through the Pennsylvania Housing Finance Agency and Delaware State Housing Authority. Sometimes you can layer a state program's low rate with a seller-paid temporary buydown. It's rare, but I've seen it done.
I can explain buydowns all day, but your situation is unique. Your credit, your down payment, your timeline, the seller's motivation, the specific home you're eyeing in Lancaster County or Charles County—it all matters.
If you're ready to explore what's actually available right now, browse my current listings or reach out directly. I'll connect you with a lender who speaks plain English, and we'll run the numbers together.
I came to real estate from education because I love the moment someone gets it—when the fog clears and the decision makes sense. Buydowns are one of those topics that sound complicated but aren't, once someone takes the time to teach instead of sell.
You deserve that clarity. Let's make it happen.
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“The best time to buy a home was five years ago. The second best time is after we talk.” — Every honest realtor, eventually