Mortgage points, lender credits and 2-1 buydowns for Florida buyers: what each costs, how a seller-paid buydown works, and when it pays off
October 31, 2026 · Zach Curtis, REALTOR®, Realty Hub
Short answer: a discount point costs 1% of the loan amount and lowers your rate for the life of the loan. A lender credit is the reverse: a higher rate in exchange for help with closing costs. A temporary buydown, such as a 2-1, lowers your payment for the first year or two only. Each one can be paid by the seller within the loan program's limits.
Points and lender credits
According to the CFPB (CFPB: points and lender credits):
- One point equals 1% of the loan amount, so one point on a $300,000 loan is $3,000. Points don't have to be whole numbers.
- Points appear on page 2, Section A of your Loan Estimate and Closing Disclosure. By law, points listed there must be tied to a discounted interest rate.
- How much each point lowers your rate depends on the lender, the loan type and the market.
- Lender credits, sometimes called negative points, show in Section J. They lower your cash at closing in exchange for a higher rate.
The CFPB's tip: if you don't know how long you'll keep the loan, ask the lender to show options with and without points or credits, and the total cost over your shortest, longest and most likely time frames.
The break-even test
Divide the cost of the points by the monthly payment you save. The result is roughly how many months it takes to earn the money back. If you expect to sell or refinance before then, points may not pay off. Here's a worked example on a $300,000 loan at the latest weekly benchmark. Freddie Mac's weekly average 30-year fixed rate was 7.24% for the week of October 29, 2026 (Freddie Mac PMMS, week of October 29, 2026); your rate depends on your credit, down payment and loan type. Principal and interest at 7.24% is about $2,044 a month. If one point ($3,000) bought the rate down by a quarter point, to 6.99%, the payment would be about $1,994. That saves about $50 a month, for a break-even of about 60 months. The quarter-point drop is an illustration only; your lender's pricing sets the real trade-off.
Temporary buydowns (2-1, 1-0)
With a temporary buydown, someone deposits money up front to lower your payment for the early years. Fannie Mae's rules (Fannie Mae Selling Guide B2-1.4-04):
- Buydowns are allowed on fixed-rate loans and certain ARMs, for a principal residence or second home, but not an investment property.
- The rate reduction can be at most 3%. Your rate can't rise more than 1% a year, and the buydown period can't exceed 3 years.
- You're qualified at the full note rate, not the bought-down rate, so a buydown doesn't raise how much you can borrow.
- The buydown must be a written agreement. You still owe the full note payment if the buydown funds aren't available for any reason.
- When the seller or another interested party pays for it, the cost counts toward Fannie Mae's concession limits.
FHA likewise counts seller-paid buydowns toward its 6% interested party limit (HUD Handbook 4000.1, Update 18). See seller concessions.
A 2-1 buydown on a $300,000 loan
| Period | Rate you pay | Principal and interest | Monthly savings |
|---|---|---|---|
| Year 1 | 5.24% | $1,655 | $389 |
| Year 2 | 6.24% | $1,845 | $199 |
| Years 3 to 30 | 7.24% | $2,044 | none |
The buydown account would need about $7,056 to cover the first two years' savings. That's a seller credit you could negotiate, within the concession cap. This is a simplified illustration; your lender calculates the actual buydown amount.
Which tool fits?
- Planning to keep the loan a long time: permanent points may be worth pricing out. Run the break-even test.
- Short on cash to close: a lender credit lowers closing costs in exchange for a higher rate.
- Want a lower payment early on: a seller-paid temporary buydown can help, but budget for the full payment from year 3.
- Condo budgets: include association dues, which can rise, alongside your payment. See why condo fees are high in Florida and income needed for a condo.
Compare offers on Loan Estimates, line up pre-approval, and check Broward closing costs. Browse Hallandale Beach, Hollywood, Dania Beach, West Park or Aventura, then start at Ready to buy.
Zach Curtis, Realtor, Realty Hub, license SL3664129. Equal Housing Opportunity. General information, not legal, tax, insurance or lending advice. Examples use the Freddie Mac PMMS average and are not rate quotes.
Questions? Ask Zach
I'm Zach Curtis, a REALTOR® with Realty Hub in Hallandale Beach. I help renters and buyers in Hallandale Beach, Hollywood, Aventura and nearby. Zach replies personally within 15 minutes, 8 AM to 9 PM ET, 7 days. Outside those hours, by 9 AM.
Questions
How much does one mortgage point cost?
One point equals 1% of the loan amount, so one point on a $300,000 loan is $3,000. Points appear on page 2, Section A of your Loan Estimate.
What is a 2-1 buydown?
A temporary buydown that lowers your rate by 2 points in year 1 and 1 point in year 2, then returns to the note rate. Fannie Mae caps buydowns at a 3% reduction, 1% annual increases and 3 years.
Can the seller pay for a rate buydown in Florida?
Yes, within the loan program's limits: Fannie Mae counts seller-paid buydowns toward its 3%, 6% or 9% concession caps, and FHA counts them toward its 6% limit.
Does a temporary buydown help me qualify for a bigger loan?
No. Fannie Mae requires lenders to qualify you at the full note rate, not the bought-down rate.
Are discount points worth it?
It depends on how long you keep the loan. Divide the cost of the points by the monthly savings to get the break-even in months, and compare that with how long you expect to keep the mortgage.
Sources
Published October 31, 2026 by Zach Curtis, REALTOR®, Realty Hub, license SL3664129. General information for South Florida, not legal, tax, insurance or lending advice. Laws, programs and prices change; check the official sources above, and ask a Florida attorney, CPA, insurance agent or lender about your situation. Listing numbers are asking prices and rents from BeachesMLS on the date shown. Equal Housing Opportunity. Zach Curtis and Realty Hub follow federal, Florida and Broward County fair housing law. Every listing is open to everyone. We never steer anyone by race, color, religion, sex, national origin, disability, familial status, age, sexual orientation, gender identity, or any other protected class.