A lower first-year payment that neither you nor the seller pays for

There is a version of the same conversation happening at kitchen tables all over Placer and Sacramento County right now. The buyer likes the house. The buyer can carry the house. And the buyer is waiting — for rates, for a better month, for somebody to tell them the coast is clear.

I understand the instinct. I also think it is quietly expensive, because while you wait you are still paying somebody’s mortgage, it is just not yours.

So let me tell you about the one tool that has done the most for my purchase clients in this rate environment, and be honest with you about its edges.

What a temporary buydown actually is

First, what it is not: it is not an adjustable-rate mortgage. This confusion costs people good loans. Your note rate is fixed for the life of the loan and it never moves.

A temporary buydown is a separate pot of money, set aside in an escrow account at closing, that covers part of your monthly payment for a defined window at the front of the loan. With a 1-0, that window is the first twelve months, and the payment during those months is calculated as though your rate were one percentage point lower than the note rate. In month thirteen, the pot is empty and you are simply paying the note-rate payment, which is the same payment you were underwritten for on day one.

That is the whole mechanism. No moving rate, no surprise adjustment, no index.

Somebody has to fund that pot

This is the part most buyers never hear. That escrow account gets filled by a lump sum at closing, and traditionally the money comes from the seller, the builder, or the lender.

Which means in practice a buydown has usually been something you had to go ask a seller for — and every dollar of seller concession you spend on a buydown is a dollar you cannot spend on closing costs, a credit for the roof, or simply on a lower price.

What is different right now

United Wholesale Mortgage, the largest wholesale lender in the country, has been running its lender-paid 1-0 buydown as a promotion, and the terms have moved twice this year. It is worth being precise, because the version people are still repeating to each other has already expired.

From May 6 through June 30 of this year, UWM covered the cost of the lender-paid 1-0 entirely. That window is closed.

The current promotion runs on new purchase locks from July 1 through August 31, 2026. Under it, the lender-paid 1-0 costs the broker 25 basis points, offset by loan-level pricing credits from UWM — 0.625% on government loans and on conventional loans with terms of 16 to 30 years, and 0.50% on conventional loans with terms of eight to 15 years.

Here is the translation that matters to you: the cost of the buydown does not come out of your pocket, and it does not come out of the seller’s. It sits on our side of the table. That is the whole point, and it is why I have been putting this in front of every purchase client I have since the spring.

Why that is worth more than it sounds

In a market where sellers have gotten less generous, the buydown is normally the thing you have to spend your negotiating capital on. When the buydown costs the seller nothing, you keep that capital for the things a seller cannot refuse as easily — repairs, closing costs, or price.

And from the listing agent’s side, an offer that improves the buyer’s first year without asking the seller for another dollar is an easier offer to say yes to.

The honest part

It is temporary. That is not a catch, it is the name of the product, but I want it said plainly: your payment steps up in year two, and it steps up to the payment you already qualified for. Underwriting uses the note rate, not the discounted one. Nobody is getting into a house they could not otherwise afford.

So my advice is unromantic. Build your budget around the note-rate payment from day one. Treat the first year as runway — for the fence, the appliances, the emergency fund you drained on the down payment — and not as your new normal.

And on the phrase everybody uses, including me: until rates come down. Nobody knows when, or whether, in any given window. Agency loans carry no prepayment penalty, so if rates do improve you have options. But a buydown is a cushion, not a refinance plan, and I will not sell it to you as one.

Where it fits

Purchase loans only — refinances are not eligible. Agency conventional and government fixed-rate loans, plus eligible conventional ARMs; government ARMs are excluded. Terms from eight to 30 years. Not available on loans originated through UWM’s Control Your Price. New locks through August 31, 2026.

If you are looking in Rocklin, Roseville, Lincoln, or anywhere else in the region, the sequence I would follow is: get pre-approved so you know your note-rate payment, get the rest of the ownership picture — taxes, any special assessment, insurance, utilities — at hiddenhomecost.com, and then decide whether a year of breathing room changes your answer on a specific house.

Most of the time it does not change whether you buy. It changes how comfortable the first year feels. That is worth having, especially when it is free to you.

If you want me to run your scenario, reach out. I will show you both payments — year one and year two — side by side, before you write an offer.

Program terms described above are UWM’s and are subject to change; eligibility, approval, and program availability are not guaranteed. This is not a commitment to lend. Cali Mortgage is an equal housing opportunity lender.