If you are looking to get lower payments on a mortgage for a few years and still be able to secure a sizable mortgage loan a buy down mortgage may be a good choice for you. This type of loan comes in three different forms; a temporary buy down loan, a compressed buy down mortgage, and a permanent buy down mortgage.

The temporary buy down is the most basic of the three types and it is also the most commonly used. This type of loan starts with a lowered interest rate for somewhere from one to three years after which it will increase in fixed increments. Basically this means your interest rate will start out at something like four percent then after a year it will increase to five finally after another year it will increase to six. Most lenders will require you to make some kind of payment when you take out a loan of this kind.

The second type of this loan the compressed buy down is very similar except the increases come every six months rather than a year. The last type the permanent buy down mortgage will have this lower interest rate for the life of the loan, however a larger payment must be made when this type is taken out in order to offset the size of the discount you will be receiving on your interest rate.

These payments that you make are basically paying for any discount you would receive. The main reason that you would apply for one of these loans is not really to save money but to qualify for a larger down payment.