buydown

noun

buy·​down ˈbī-ˌdau̇n 

variants or less commonly buy-down

plural buydowns also buy-downs

: any of various mortgage financing techniques in which an extra sum is paid to the lender up front in exchange for a lower interest rate for a set number of years or for the term of the loan

When first-time buyers Rachel Shatto and Randy Nelson purchased a home in Oakland in May, they negotiated an interest rate buydown that effectively lowered their mortgage rate, and thus their monthly payment, for the first two years.

—Kathleen Pender

Though a majority of buydowns are negotiated between buyers and lenders, sellers and builders also can offer the concession to attract buyers without reducing the listing price.

—Bailey Schulz

Word History

First Known Use

1974, in the meaning defined above