A float-down provides the same protection as a lock, plus an option to reduce the rate if the market rates decline.  Like a lock, a float-down is an option that can be attached to any kind of mortgage.  It is more costly for the lender to provide because it is of more value to the borrower than a lock.  Because of this, the borrower has to pay for it.

On a lock the lender promises that the loan terms agreed upon will be honored when the loan closes, regardless of what happens to market interest rates during that time.  However, borrowers sometimes walk away when the rates go down if they have enough time to start the process all over again.  To prevent this, some lenders will charge a non-refundable fee that the borrower will lose when they walk, but most lenders don'' charge anything.

With a float-down, borrowers have the right to have the rate reduced.  Usually the borrower can exercise that right only once, then the float-down converts to a lock.  A float-down comes with a price.  The borrower pays for the right to take advantage of any reduction in the market rates that occur within the float-down time period.  The lenders who offer them set the terms, conditions and fees of the float-down.  There is no standard contract for a float-down.   Because of this you might not be able to exercise your float-down until the week before close, as an example.  The reason it is the lenders that set the conditions, terms and fees of the float-down, is to discourage the use of the float-down. The lender are the ones who stand to lose money.  So it is understandable that they are not going to make it easy for you.

The broker or lender should explain the exact terms of the float-down before going into it.  These should include when you can exercise any minimum decline in rates or points and how the current market price is determined, and explain it all to you in detail.  It is not wise to pay for a float-down where the market price is not communicated to you in person.  Never over the phone.  You should get a copy of the price sheet with the relevant price circled at the time float-down and then again when you get to exercise the float-down.  That let's you know that you are getting what you paid for.