Interest rates don’t have to define your dream home — strategy does. In 2025, the smartest buyers aren’t waiting for rates to drop — they’re making them drop for themselves through rate buy-downs.

Temporary Buy-Downs: Short-Term Boost, Long-Term Gain

The 2-1 buy-down is the most popular. Year 1: rate drops 2 percent. Year 2: drops 1 percent. By Year 3, the loan resets to market rate — but most buyers refinance before then.
A $1M loan at 6.75% drops to 4.75% the first year — saving roughly $1,150 per month. That’s real cash flow for furnishing, repairs, or emergency reserves.

Permanent Buy-Downs: Equity Through Investment

Permanent buy-downs cost more up front but secure lasting savings. Buyers often split costs with sellers using credits negotiated into the contract — a move Jason has perfected in Pasadena deals.

Why It Matters Now

Rates hovering around 6.75% haven’t slowed Pasadena demand — but they’ve reshaped affordability. Buy-downs turn hesitation into action. They also pair beautifully with HELOC-based bridge loans for move-up buyers.

Real Example

A Silver Lake buyer Jason represented secured a $1.3M home with a seller-funded 2-1 buy-down worth $18K. Her first-year payment dropped by $1,400 monthly — and she plans to refinance when rates fall to the 5s.

“Buy-downs aren’t discounts,” Jason says. “They’re time machines — they move you forward to the moment you can refinance from strength.”

How to Structure One Right

  • Ask for seller credits of 2–3% to cover costs.

  • Work with a lender experienced in temporary buy-downs.

  • Plan a refi timeline based on rate cycles and personal goals.

The Bottom Line

Buy-downs bridge the gap between today’s rates and tomorrow’s opportunity. When used with strategy, they turn 2025’s market from “wait and see” to “ready and win.”

FAQ

Q: Do rate buy-downs make sense for every buyer?
A: Yes, especially for those planning to refinance within 2–3 years.
Q: Can the seller pay for the buy-down?
A: Yes — it’s often covered through seller credits in the offer.

Learn how a buy-down could shrink your payment today at Jason Bergman – The Agency Pasadena.