Interest buy down and how to use in a deal.

[George Knetzger]

Hello  folks. My question has to do with interest buydown.  Is there a minimum interest rate?   I know other factors such as location, dp, prequel are used. For example. 8.125 % do wn to say 5%.  Doable and how much? Thanks

[Riaz Gillani]

Agreed with all whom mentioned the buy-down scale is relative to lender. Some may be fixed (maybe a 2:1 - so every eighth off the par rate costs a quarter in points payable at closing) while others accelerated (maybe the first eighth off the par rate costs a quarter, the second costs a half, the third a full point...). 

Re: doable from 8 to 5 - no. Like someone mentioned, that would not be buyable on secondary markets - not even with an exorbitant amount of points paid at closing. There's too much uncertainty between foreign affairs, inflation, domestic affairs, commodities, oh and inflation.