I’m Travis Buis, a loan officer with Elite Home Lending in Myrtle Beach. When the Grand Strand market slows and listings sit, seller credits come back. A seller paid buydown in South Carolina is often the most useful way to spend one.

What is a seller-paid buydown?

The seller puts money toward your loan at closing to lower your interest rate. Your rate starts lower and steps up on a set schedule, or in some cases stays lower for good.

The loan underneath doesn’t change. What changes is what you pay, funded by the seller instead of you.

What types of buydowns are there?

Temporary buydowns

The seller’s money goes into an escrow account that covers part of your interest for the first year or two. Common structures are named for how they step down, such as a 2-1 buydown or a 1-0 buydown. After that period, you pay the full note rate.

Permanent buydowns

The seller pays discount points, which lower your rate for the life of the loan. It costs the seller more up front, but you keep the savings.

Why does this come up on the Grand Strand?

Because many sellers here would rather give a credit than cut the price. A lower sale price resets the comparable sales for the whole building or street, while a closing credit doesn’t show up the same way.

That’s why it’s often easier to negotiate than a price cut of similar value. It’s especially true in condo buildings, where owners watch each other’s sale prices closely.

What are the rules?

• Seller credits have limits that depend on your loan type and down payment, so the credit has to fit inside them.
• You usually qualify at the full note rate on a temporary buydown, not the lower starting rate.
• The credit has to be written into the contract the right way, which is why I want to see it before you sign.

When is it worth asking for?

When the property has been sitting, when you’re buying outside peak season, and when lower early payments help you. For example, someone expecting their income to climb, or planning to refinance if rates drop, gets real value from those opening years.

Here’s the part to be careful about. On a temporary buydown the rate does step up, so qualify on the payment you will have after the subsidy ends, not the one you start with. If that later number doesn’t work, the buydown isn’t solving your problem, just postponing it.

Compare it against a straight fixed rate mortgage so you can see both side by side. Then get pre-qualified before you write the offer, so the credit is structured correctly from the start.

Seller-paid buydown FAQ

How does a seller-paid buydown work?

The seller puts money toward your loan at closing to lower your interest rate, either for the first year or two or for the life of the loan.

What is a 2-1 buydown?

A temporary buydown where your rate is reduced the most in the first year, a little less in the second year, and then settles at the full note rate.

Do I qualify at the lower rate?

On a temporary buydown, you usually qualify at the full note rate, not the reduced starting rate.

Is a buydown better than a price cut?

Often, for both sides. Sellers avoid lowering the comparable sales, and you get lower payments early on. Which one is better depends on your plans.