How to Enter a Buydown Program in SphereLOS

What’s a buydown?

A buydown temporarily lowers the borrower’s interest rate for a set period. Common examples:

Plan	Rate Reduction Example
3-2-1	–3% in Year 1, –2% in Year 2, –1% in Year 3, then full note rate thereafter
2-1	–2% in Year 1, –1% in Year 2, then full note rate thereafter
1-1-1	–1% for the first three years, then full note rate in Year 4
1-1	–1% for the first two years, then full note rate in Year 3
1-0	–1% for the first year, then full note rate in Year 2

SphereLOS supports both predefined plans and custom configurations via Loan Additional > Buydown Information.

Admin Setup: Enable Buydown in a Program

(System Admins only)

To make the Buydown section available in loan files:

Go to Settings > Programs.
Click the edit pencil icon next to an existing program, or click Create New Program at the top right
For new programs, complete the relevant fields within the Program Edit (rate type, amortization term, qualifying payment type, etc.)
Under Additional, click the Buydown toggle to enable it.
Click Save

For more details, see the full guide: How to Create a New Program in SphereLOS

Entering a Buydown in the Loan File

Open the loan and go to Overview > Terms and Mortgage.
In the Program field, select your Buydown-enabled program.
Enter the full Note Rate (not the reduced rate).
Click Save.

⚠️ If the Note Rate is missing or reduced, calculations will be inaccurate. Always enter the full Note Rate.

5. Next, go to Loan Additional > Buydown Information and click the edit pencil.

6. Under Predefined Plan, choose one of the following:

- Select a Predefined Plan (e.g., 2-1, 3-2-1): Fields like Change Frequency Months, Increase Rate Percentage, and Duration Months will auto-populate — review them for accuracy.
- Choose Not Defined to create a custom plan by manually entering Change Frequency Months, Increase Rate Percentage, and Duration Months

7. Under Funds Source Type, choose the appropriate option from the dropdown list (borrower, property seller, lender, or other).

8. Click Save to generate the Buydown Funds dollar amount and view the detailed breakdown (effective interest rates, borrower payments, and buydown costs per period).

LE & Disclosure

Borrower-paid buydowns:
- LE and Amortization Schedule will show reduced rates
- Ensure Disclosure > Cost Details includes a Buydown Fee or equivalent
Non-borrower funded buydowns:

- LE shows the full Note Rate
- Ensure Disclosure > Cost Details includes a Buydown Fee or equivalent

Always check with your lender for specific disclosure requirements.

To Add a New Fee Type (Buydown Fee) to the Disclosure:

Go to Disclosure > Cost Details.
Click Edit in the top-right corner and select Add New Fee/Escrow.
In the Fee Edit window:
- Choose the appropriate Loan Estimate cost category (e.g., Origination Charges, Prepaids, Other).
- Select the Fee Type from the list. If Buydown Fee is not available, choose Other and enter Buydown Fee as the name.
- Complete all other required fields.
Click Save.
Review the Cost Details screen and click Save again when finished.

Click here fo r detailed guidance on How to Set Up Company Fee & Escrow Templates in SphereLOS.

Common Buydown Issues and How to Fix Them

Issue	Solution
Buydown section missing in the loan file	Confirm the program was created by a System Admin and the Buydown option is turned ON in Program Settings.
Cash from borrower looks incorrect	Review Details of Transaction, Closing Costs, and Credits to ensure everything balances.
Buydown funds not calculating correctly	Check that the full Note Rate (not the reduced rate) is entered in Overview > Terms and Mortgage and the correct Buydown Plan is selected under Loan Additional > Buydown Information.
Loan Estimate not showing reduced rate	Verify the Buydown Fund Source under Loan Additional > Buydown Information. Only borrower-paid buydowns display reduced rates on the LE.

Questions? Contact us at support@spherelos.com — we’re here to help.