1-0 buy down · Home purchase
Your first-year payment, based on a rate 1% below your locked rate.
A 1-0 buydown gives you breathing room in the year when moving, furnishing and settling in all hit at once. Your fixed rate stays fixed, and the full payment starts in month 13.
How it works
A fixed rate, with a softer first year.
1
You lock your rate
Your loan gets a normal fixed note rate. That rate is the one on your paperwork, and it never changes.
2
Year one is bought down
Money set aside at closing covers part of each payment for 12 months, so your payment is figured on a rate one percentage point below your note rate.
3
Month 13, the full payment starts
Your payment steps up to the full note-rate payment and stays there. No adjustments and no surprises after that.
Your monthly payment, illustrated
Months 1–12
Payment based on a rate 1% below your locked rate
Month 13 on
Full payment at your locked rate, for the life of the loan
Illustration only, not to scale. It does not show an actual payment.
Who pays for it
Somebody funds the first year. It does not have to come out of your offer.
A buydown is real money set aside at closing. Who puts it there changes how the deal looks, so Aaron compares the options before you write an offer.
A seller
A seller credit can fund the buydown instead of a price cut. Often a useful ask when a home has been sitting.
A builder
New-construction incentives often include a buydown. Compare it to what the builder’s own lender is giving up elsewhere.
A lender
On eligible purchases, Cali Mortgage can arrange a lender-paid 1-0, so nothing has to be negotiated into your offer. Aaron will show you how it is priced.
Plainly
A cushion, not a refinance plan.
The payment goes up in month 13, and nobody can promise rates will fall. Budget for the full payment from day one, and treat the first-year savings as extra room.
Good fit
- You can comfortably afford the full payment, and want an easier first year
- Moving costs, furniture and repairs are all landing at once
- You would rather not ask the seller for concessions
- You plan to keep the home past the first year
Think twice
- You only qualify, or only feel comfortable, at the lower first-year payment
- You are counting on a refinance to avoid the full payment
- A lower rate for the whole loan would save you more over your time in the home
Comparing loans? See conventional fixed, FHA and VA, or browse all loan products.
Questions
The 1-0 buydown, answered.
A temporary buydown that lowers your monthly payment for the first 12 months. Your payment is calculated as though your rate were one percentage point lower. Starting in month 13 you pay the full payment on your note rate for the rest of the loan.
No. Your note rate stays fixed for the life of the loan. The buydown is money set aside to cover part of your payment during the first year. It is not an adjustable-rate mortgage.
A seller or builder can fund it, and on eligible purchases Cali Mortgage can arrange a lender-paid version. Lender-paid does not always mean it comes for nothing: it can be built into the pricing of the loan. Aaron will show you the loan with and without the buydown so you can see the difference.
Generally no. Lenders qualify you at the full note rate, so plan your budget around the full payment from day one and treat the first-year savings as breathing room.
Temporary buydowns are generally for purchases, and eligibility varies by lender, loan program, property and occupancy. Tell Aaron what you are buying and he will confirm what fits.
Unused buydown funds are handled according to your loan documents, and they are often applied to your loan balance. Aaron will walk you through how it works on your specific loan.
It depends how long you expect to keep the loan. A buydown helps most in year one, while a permanently lower rate helps every month. Aaron will lay them side by side.
Cali Mortgage · Roseville, California
See the loan with and without it.
Aaron will price it side by side before you write an offer, so you know what the first year and every year after it really look like.
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