# The Free 1% Advantage: Our Lender Paid 1/0 Buydown Strategy By Bill Jawitz (@billjawitz) · Published 2026-10-19 Canonical: https://voce.com/@billjawitz/free-advantage-lender-paid-buydown-strategy-o6uvdq --- A 1% lower mortgage rate for an entire year, paid for by the lender, with nothing owed by the buyer — that is the lender-paid 1/0 buydown strategy Bill Jawitz brings to every qualified purchase at Franklin Loan Center. Instead of asking sellers to negotiate a rate concession or asking buyers to fund discount points, the lender covers the subsidy that drops the rate 1% for the first 12 months of a new loan, easing the cash-flow pressure that hits hardest right after closing. As a Branch Manager at Franklin Loan Center in Palm Desert, I've watched too many buyers stretch their budgets in year one — furnishing a home, covering moving costs, adjusting to new utility and maintenance bills. This structure attacks that exact problem, and because Franklin Loan Center pays for it, it costs you nothing upfront and nothing in closing. #### Key Takeaways - A 1/0 buydown cuts your interest rate by 1% for the first year, then adjusts to your original locked rate. - The lender — not the buyer or seller — pays the cost of the subsidy under Franklin Loan Center's program. - The lower year-one payment helps with the moving, furnishing, and utility costs that hit right after closing. - Buyers qualify at the full note rate, so the payment you can handle is confirmed before you ever sign. - With 35+ years in the mortgage industry, Bill Jawitz structures this to give first-time buyers a genuine head start. ## What Is a Lender Paid 1/0 Buydown? A 1/0 buydown is a temporary rate reduction that lowers your interest rate by 1% for the first year of a mortgage, then reverts to the original locked rate in year two. The "1/0" refers to the schedule: a 1% reduction in year one, zero in every year after. In a lender-paid version, the lender covers the cost of that subsidy — unlike a seller-paid buydown, where the seller (or a builder, on new construction) negotiates to fund it ([Waterstone Mortgage](https://www.waterstonemortgage.com/blog/mortgage-basics/2023/01/temporary-buydown-information)). The funds that make up the difference between your reduced payment and your full payment are held in escrow and released each month to cover the gap. At Franklin Loan Center, the key distinction is who writes the check: the lender absorbs that cost, so the buyer gets the lower rate for free. ![couple signing mortgage documents](https://media.gettyimages.com/id/2149740697/photo/real-estate-or-insurance-agent-with-couple-looking-through-documents.jpg?s=612x612&w=gi&k=20&c=4mM4XjmAuraQ1vdhSWoqZGp9-LM3jN_qeGnxsGRLJjc=) This matters most in a market where sellers resist cutting price or funding incentives. When a seller won't negotiate a buydown, a lender-paid version removes that dependency entirely — you get the benefit without asking anyone for a concession. ## Why We Offer This for Free The short answer: we'd rather grow relationships than grow fees. Franklin Loan Center's lender-paid 1/0 buydown is a way to put the advantage squarely on the buyer's side at no upfront cost, and it reflects how the company does business — a California-licensed lender with a diverse set of products across conventional, FHA, VA, and jumbo programs, headquartered in Palm Desert ([Franklin Loan Center](https://www.franklinloancenter.com/California.html)). With **35+ years in the mortgage industry**, I've learned that the buyer who starts with a little breathing room tends to be the buyer who stays, manages their home well, and comes back for the next chapter. A first year that isn't consumed by a tight payment builds goodwill that a few hundred dollars in lender subsidy more than pays back. That's the bet the lender-paid structure makes, and it's one I'm glad to make on behalf of our buyers. It also sets us apart. Most buydowns require someone to fund them — typically the seller, which means negotiation, or the buyer, which means paying points. When the lender absorbs the cost, none of that friction exists. You're not asking the seller to eat the incentive, and you're not paying points out of pocket. ## Qualification and Strategy The 1/0 buydown works with purchase loans and a range of programs, and the single most important rule is this: **you qualify at the full note rate, not the reduced one**. Lenders confirm you can handle the payment once the buydown ends, so the year-one rate is genuinely bonus breathing room on a loan you already comfortably qualify for ([Movement Mortgage](https://movement.com/blog/2026/06/temporary-rate-buydowns-explained)). This makes the 1/0 a smart strategic choice in a shifting rate environment. A temporary buydown costs less than a permanent one and doesn't lock you into points paid up front — if rates ease later, you can refinance without having bought into an expensive permanent buy-down. For buyers who expect their income to climb, the payment steps up as the paycheck does. For anyone whose first year of ownership brings the heaviest spending — new furniture, repairs, utilities — the lower payment lands exactly where it helps most. ## How to Get Started If this sounds like a fit for your purchase, the first step is a conversation about your target home, loan size, and timeline. Bring your questions about rates, qualification, and how the buydown changes your year-one budget — I'll run the numbers with you and show exactly what the free 1% does to your monthly payment. As a Regional Manager at Franklin Loan Center (NMLS# 208309) in Palm Desert, I've spent more than three decades helping California buyers navigate the mortgage market. If you'd like to see whether the lender-paid 1/0 buydown fits your next purchase, reach out to me directly, or share your experience at Franklin Loan Center on our [Google Business Profile](https://search.google.com/local/writereview?placeid=ChIJs07BVcV_24ARN4MJZ9HGJXg). Let's get you into your new home with a stronger first year.