2-1 Temporary Buydown Loans in Frisco & DFW
A 2-1 Buydown Loan, or Temporary Buydown, is a mortgage option that lowers your interest rate for the first two years of your loan. At First Lonestar Bank, we use this program to help Frisco and DFW homebuyers transition into a new mortgage with significantly lower initial monthly payments.
How does a 2-1 buydown work?
In a 2-1 buydown, your interest rate is reduced by 2% in the first year and 1% in the second year. By the third year, the rate returns to the original "note rate" for the remainder of the loan.
- Year 1: Your rate is 2% lower than the permanent rate.
- Year 2: Your rate is 1% lower than the permanent rate.
- Year 3+: Your rate adjusts to the final, fixed contract rate.
To cover the difference during these first two years, a lump sum is paid upfront and held in an escrow account, which is then drawn from to supplement your lower monthly payments.
Why Choose a Buydown in North Texas?
In the fast-moving Dallas/Fort Worth housing market, a buydown is often a strategic win for both buyers and sellers:
- Lower Entry Cost: Ideal for first-time buyers who want flexible payments while they grow their income or settle into homeownership.
- More Cash Flow: Reduced payments in the first 24 months mean more available cash for furniture, upgrades, or savings.
- Seller Incentives: In a competitive market, sellers or builders may pay the "buydown fund" at closing as an alternative to a price reduction, making the home more affordable for you without lowering its market value.
- Refinance Ready: This product is perfect for buyers who plan on refinancing in a few years when permanent market rates may be lower.
The First Lonestar Difference
We aren't just a mortgage company; we are your neighbors. Whether you are looking in Frisco, Plano, or McKinney, our local team will bend over backwards to help you determine if a temporary buydown is the right move for your financial future. Talk to a mortgage loan officer today!
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Temporary Buydown Frequently Asked Questions (FAQs)
Who is a 2-1 buydown best suited for?
It is a great fit for anyone expecting their income to grow or those navigating a transition period early in homeownership. It is also a popular choice for property investors looking to maximize initial cash flow.
Is this a permanent rate reduction?
No. The reduced rate is temporary for the first two years. In year three, the loan returns to the original note rate agreed at closing.
How are the lower payments funded?
The "savings" you see in the first two years are pre-funded by a lump sum deposited into an escrow account at closing. This payment can be made by the buyer, the seller, or even a homebuilder.
The Fine Print
This is not a commitment to lend; you must submit additional information for review and approval. Rate, Annual Percentage Rate (APR), and terms are subject to change without notice. Certain restrictions apply to all programs. See your FLB Mortgage Loan Officer for complete program guidelines, loan application, applicable fees and annual percentage rates (APRs) for all loan programs. Full underwritten approval is required, and all loan approvals are subject to credit, income and asset review and approval. Bank NMLS#1215182
In the first year, you'll save 2% on the interest rate. In the second year, you'll save 1%. In the third year, the loan will move to a standard fixed rate. Buydowns can be an attractive benefit for both buyers and sellers.
Contact FLB Mortgage to get started!
Call an FLB Mortgage Lender or visit our branch in Frisco, Texas, today!
