Rate Buy-Downs in Utah: What to Ask Your Lender Before You Pay a Dime
By Michael Chase Hooper, Realtor · Serving Utah County, Salt Lake County, and northern Utah · Updated October 14, 2026
Builders, sellers, and lenders are all offering "rate buy-downs" right now. But is a buy-down a real bargain or just good marketing?
The answer depends on three things: how long you plan to stay in the home, who is paying for the buy-down, and whether you can comfortably afford the full payment once the discount ends. With the 30-year fixed rate averaging 7.28% on October 1, 2026 (Freddie Mac), a lower rate is worth asking about. And in Salt Lake County, where the median single-family home hit a record $645,000 in the second quarter of 2026 (Salt Lake Board of REALTORS), even a small change in rate moves your payment by real money.
The market is also giving buyers a little more room to ask. In Salt Lake County, new listings rose 3.56% from a year earlier and average days on market rose from 45 to 48. Compared with a year earlier, median single-family prices dipped in Utah County (down 0.83%), Davis County (down 1.57%), and Tooele County (down 1.52%).
Two kinds of buy-downs
A permanent buy-down means paying discount points at closing to lower your rate for the life of the loan. One point costs 1% of the loan amount and typically lowers your rate by about 0.25%, though your lender's numbers will vary.
A temporary buy-down, such as a 2-1, lowers your rate for the first year or two only. In a 2-1 buy-down, your rate is 2% lower in year one and 1% lower in year two, then settles at the full rate from year three on. The money to cover the difference is usually deposited into an escrow account at closing, and it's often paid by the seller or builder rather than you.
What the numbers look like
Here's an illustration on a $400,000 loan at 7.28% (principal and interest only, so your real payment will include taxes and insurance, and your actual quote will differ):
No buy-down: about $2,737 per month.
One discount point ($4,000): the rate drops to about 7.03% and the payment to about $2,669, a savings of roughly $68 per month. It takes nearly five years to earn that $4,000 back.
2-1 temporary buy-down: about $2,216 per month in year one and $2,471 in year two, roughly $9,400 in savings over the two years. In year three, you're back to $2,737.
That's the whole story in a nutshell. Points reward the buyer who stays put, and temporary buy-downs reward the buyer who gets someone else to pay for them.
What to ask your lender...
Is this buy-down temporary or permanent? Don't assume. Ask for the rate and payment in every year of the loan.
Who is paying for it? A seller- or builder-paid buy-down keeps your cash in your pocket. Ask if it can be part of your offer.
What does each point cost, and how much does it lower my rate? Get it in writing on a Loan Estimate, line by line.
What's my break-even point? Divide the cost of the points by your monthly savings. If you may sell or refinance before then, skip the points.
Will I qualify at the full payment? With a temporary buy-down, lenders generally qualify you on the full payment, not the discounted one. Be sure you can carry it when the discount ends.
What happens to unused buy-down funds if I sell or refinance early? The answer varies by loan, so ask.
Would a price reduction or closing-cost credit help me more? Sometimes the same dollars do more good somewhere else.
Can I compare a no-buy-down offer side by side? Look at total cost over the years you expect to own, not just the first payment.
A couple of cautions. Rolling points into your loan balance raises your principal and usually erodes the savings, so paying them out of pocket is often better. And don't let a low first-year payment talk you into a home whose full payment you can't carry. Discount points on a primary home purchase are often tax-deductible, but check with your tax professional.
The best strategy for many buyers right now is to negotiate a seller- or builder-paid temporary buy-down, keep your cash, and refinance into a lower permanent rate if the market delivers one. Just remember that refinancing is never guaranteed. If you're shopping in Utah County, Salt Lake County, or the surrounding counties, ask me which sellers and builders are open to paying for a buy-down.
As always, contact me for more information about rate buy-downs and your financing options. I'm happy to answer all of your questions.
About the author: Michael Chase Hooper is a Realtor helping buyers and sellers in Utah County, Salt Lake County, and surrounding northern Utah communities.