Should You Refinance Your Mortgage in Bloomington MN in 2026? I talk to homeowners about…
One Key to Lowering Your Mortgage Payment in the First Year That Most Lenders Skip
One Key to Lowering Your Mortgage Payment in the First Year That Most Lenders Skip
You just got your loan estimate. You looked at that monthly payment number and felt it.
Maybe it was higher than you expected. Maybe it is right at the edge of comfortable. Either way, you are wondering if there is any flexibility in that number.
There is. And most lenders will never tell you about it.
If you are trying to figure out how to lower your mortgage payment when buying a home, a lender-paid 1-0 temporary buydown is one of the most practical tools available right now. The lender funds it. You pay nothing extra at closing. And your payment is lower for the entire first year.
Here is how it works.
What Does It Actually Mean to Lower Your Mortgage Payment When Buying a Home?
Most buyers think the rate they are quoted is the rate they are stuck with from day one.
That is not always true.
Your rate is one piece of the payment equation. There are legitimate ways to structure a loan so your payment starts lower and adjusts over time. The lender-paid 1-0 buydown is one of those tools.
It is not a gimmick. It is a real loan structure that a specific type of lender can offer. And most cannot.
What Is a 1-0 Temporary Buydown?
A 1-0 temporary buydown reduces your interest rate by 1% for the first year of your loan. After year one, the rate adjusts to the full note rate you originally agreed to and stays there for the rest of the term.
So if your note rate is 6.23%, you pay at 5.23% for year one. Then 6.23% from year two forward.
The cost of that reduced rate has to be funded by someone. In a standard buydown the seller or builder covers it. In a lender-paid buydown the lender covers it through a credit.
You do not pay for it out of pocket at closing.
The lender absorbs the cost, typically in exchange for a slightly higher note rate. This is available on conventional and VA loans. Not all lenders offer it. It takes a broker with access to the right wholesale lenders to put this on the table.
How Much Can a Lender-Paid Buydown Actually Save You?
Here is a real example using current numbers.
According to Freddie Mac, the average 30-year fixed rate as of April 23, 2026 was 6.23%.
On a $400,000 loan at 6.23%, your principal and interest payment is approximately $2,464 per month.
With a 1-0 buydown, your year one rate drops to 5.23%. That brings your payment down to roughly $2,224 per month.
That is approximately $240 less every month for the entire first year.
On a $400,000 loan that is $2,880 back in your pocket over twelve months. The lender funds it. You pay nothing extra at closing to get it.
For a buyer in the Twin Cities where median home prices are running between $355,000 and $380,000, the savings are real and meaningful from the first payment.
Why Don’t More Lenders Offer This?
Most banks and retail lenders work from a fixed product menu.
They offer what their institution has approved. That is it. If a lender-paid 1-0 buydown is not on their menu, they cannot offer it and they will not bring it up.
Here’s the deal: brokers work differently.
A mortgage broker works with multiple wholesale lenders. That access means a wider product menu. When one lender has a program that fits a client’s situation, a broker can go there. A bank cannot.
This is not about one lender being better than another. It is about access.
The more lenders a broker works with, the more tools they have to find the right fit for the right buyer. This is one of those tools. And it is one that most buyers in Minnesota never hear about because their lender simply does not have it.
You can read more about the difference between working with a broker versus a bank here.
Is a Lender-Paid Buydown Right for You?
It depends on your situation. Here are a few scenarios where it fits well.
You want the lowest possible payment in year one. If cash flow matters right now and you want breathing room while you settle into the home, a lower payment for the first twelve months gives you that. No extra cost to get it.
You think rates might drop in the next year. This is where the strategy gets interesting. If rates come down during year one, you can refinance into the lower rate before your buydown period ends. You got payment relief in the short term and a better rate in the long term. Both wins.
You are buying in a higher price range and every dollar of monthly payment matters. On a $375,000 to $400,000 loan in the Twin Cities market, $240 a month is not a small number. That is a car payment. That is a month of groceries. It is real money.
But there’s a catch. If you are planning to pay off the loan aggressively in the first few years or if your current rate environment makes a different structure more competitive, this may not be the best fit. That is exactly the kind of thing worth talking through before you decide.
You can check current mortgage rates here and run your numbers in the mortgage calculator to see how the payment difference looks for your loan amount.
Ready to See If This Works for Your Loan?
Lowering your mortgage payment when buying a home does not always require a bigger down payment or a lower purchase price. Sometimes it is about knowing which tools exist and having a lender who can actually access them.
The lender-paid 1-0 buydown is one of those tools. Available on conventional and VA loans through CFR Mortgage, serving buyers across Minnesota, Wisconsin, and Florida.
The first step is a conversation. Not a commitment.
Start here when you are ready. Or visit the Education Hub to keep learning first.
Ken Graczak is a licensed mortgage broker with CFR Mortgage. This post is for educational purposes only. Rate examples are based on Freddie Mac data from April 23, 2026 and are subject to change. Individual loan terms vary based on credit, income, and lender guidelines.
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