Gershman Mortgage: Temporary Rate Buydown Program

In today’s market, it’s easy to feel discouraged looking at home prices, leaving you wondering how you’ll ever be able to afford a home. Rest assured, Gershman Mortgage has your back with our Temporary Rate Buydown Loan Program, which allows you to enjoy reduced payments while settling into a new mortgage.

You may be wondering what a temporary rate buydown is, so let us answer a few common questions about the program.


What is a temporary rate buydown?

A temporary rate buydown is a mortgage loan option in which the seller, builder, or borrower buys down the interest rate of the first three or two years of the loan. Gershman Mortgage proudly offers 1-1 temporary rate buydowns for FHA, VA, Conventional, and USDA Loans. We also offer 2-1 temporary rate buydowns for FHA, VA, Conventional, and USDA Loans and 3-2-1 temporary rate buydowns for FHA, VA, and Conventional loans, all of which are applicable to primary and secondary homes.

Take a look at a 2-1 buydown example:

In year one, the interest rate is 2% less than the original locked rate. In year two, the interest rate is 1% less. In years 3-30, the interest rate is the original locked fixed rate.


What is the qualification process for a temporary rate buydown program?

During the temporary buydown period, the borrower must have a lower effective rate; however, for qualification purposes, the borrower must qualify at the original note rate.


Can borrowers make extra payments to offset future rate increases?

No, they cannot.


Are there any additional costs associated with a temporary rate buydown program?

There is no additional fee to use the temporary rate buydown program. However, the funds that are subsidizing the temporary lower monthly payments are collected upfront at closing and put into an escrow account. Essentially, this means the interest for the buydown period is being prepaid. These upfront costs are typically paid for by the seller or the home builder at closing in the form of a concession.


If you’re interested in purchasing a home, it may be a good idea to sit down with a knowledgeable loan officer before you are ready to buy. Gershman Mortgage staffs only the best and brightest loan officers in the game, and they will help you make the best decision for you and your family. Especially when it comes to down payments, they can help you determine a price range that fits your budget and how much you’ll need.

When you are ready, contact Andy Schoemehl at 314-221-7797 to start your journey toward buying your dream home today.

Andy Schoemehl | Vice President
314.221.7797 phone | 636.898.1017 fax
[email protected]
NMLS #258507
16253 Swingley Ridge Rd, Suite 200
Chesterfield, MO 63017


About the Author
Worth Clark Realty
We’re a true full-service real estate brokerage, providing innovative and value-driven services to help people buy, sell, and lease residential real estate.

We're proud to be agent-owned.