Mortgage buydowns and subsidies in today’s talent-focused relocation policies

September 19, 2022

How offering this benefit can help both employers and transferees navigate the rising cost of homeownership.

Concerns about higher living and housing costs following a move have been among the top drivers of reluctance to accept relocation offers, historically. Today, with mortgage rates taking a turn higher, concerns about increased home financing costs are also weighing on the minds of top talent who are asked to relocate. Whether the motivation to assist a homeowner is a differential in the costs of housing and/or living, or to lessen the shock of a significant increase in mortgage rates, there are several benefits of a mortgage buydown/ subsidy approach a mobility program manager should consider:

  • Helping employees retain their homeownership status when they move using targeted mobility benefits such as a mortgage buydown/subsidy can contribute to talent retention. A homeowner is more likely to be invested in their destination community and therefore committed to their employer, so assisting transferees with maintaining their homeowner status is a crucial step for companies looking to improve their employee retention. 

  • Beyond making a home purchase in a high-cost destination feasible, a mortgage buydown/ subsidy may further enhance employee retention by encouraging transferees to stay in their move destination, at least for the benefit payout term. 
  • Although subject to limitations, the employee may be able to claim a deduction for mortgage interest to offset the tax impact of receiving the buydown/ subsidy benefit. This results in a greater financial impact for the transferee compared with other options with a similar cost to the company.

  • There is no risk of loss to the employer since they recoup unused funds from the lender if a transferee leaves the company during the term of the subsidy.

  • A subsidy places funds directly where the transferee needs them for an easier cost comparison when making their decision to accept the relocation. It can also be flexibly structured to allow a portion of the benefit to be paid upfront as down payment support, which can be a hurdle for homeowners entering a high-cost market.
  • Applying a buydown/ subsidy does not prohibit the mortgage from being refinanced in the future if rates come down. 

Overall, there are benefits to both the employer and transferee when incorporating buydowns/ subsidies into relocation policies. Overcoming move reluctance related to concerns about higher living, housing and/or financing costs at the destination is key to promoting acceptance of a relocation offer. Further, because buydown/subsidy provisions help employees gradually assimilate to higher costs, the ability to retain homeownership status following a move can be a critical contributor to longer-term talent retention. 

In summary, there are a range of options to consider for addressing high housing and/or living costs or assisting your relocating employees with financing home purchases in a volatile rate environment. 

Your U.S. Bank client relationship team is available to guide you to options that best suits your program’s unique needs. The team is also positioned to offer insights into how best to track and report these sorts of programs, assist with composing a business case for utilization of the benefits, walk you through options for a particular transferee and help you gain a clear understanding of estimated costs.


Read more about how homebuying and mobility trends impact employees and connect with corporate relocation experts and home lending specialists.

This information is for education only. This information is not a consumer credit advertisement as defined by Regulation Z. The information provided represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. U.S. Bank and their representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation. 

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.