A 2-1 buydown can lower early payments—but FHA still underwrites the real mortgage.
Temporary buydowns reduce the borrower's payment for a defined initial period through funds deposited for that purpose. They do not permanently reduce the note rate.
Qualification
FHA underwriting does not treat the temporary bought-down payment as though it were the permanent contractual payment. The borrower must satisfy FHA's applicable qualification requirements using the mortgage terms required by the Handbook.
Who can fund it?
Permitted sources can include the seller, lender, borrower or another eligible party depending on the transaction. When an interested party funds the buydown, the payment is included in FHA's interested-party contribution analysis.
Purchase/fixed-rate framework
FHA's temporary-bydown policy is designed around eligible purchase/fixed-rate structures. It should not be assumed to apply identically to every FHA product; for example, Title I Property Improvement Loans specifically prohibit temporary interest-rate buydowns.
Source standard
Mortgage Navigator uses HUD/FHA Handbook 4000.1 and current HUD program materials as its policy baseline. Current Handbook update: August 12, 2026. Draft policy is not treated as effective policy.