What is Builderbuydown Loan?

A mortgage loan on newly developed property that the builder subsidizes during the early years of the development. The builder uses cash to buydown the mortgage rate to a lower level than theprevailing market loan rate for some periodof time. The typical buydown is 3% of theinterest rate amount for the first year, 2% for the second year, and 1% forthe third year (also referred to as a 3-2-1 buydown).