The 3-2-1 buydown. See your first three years.
A temporary buydown lowers your interest rate for the first years of the loan, then your payment settles at the full rate. A 3-2-1 steps down 3, 2 and 1 points. Choose a 3-2-1, 2-1 or 1-0, enter your loan amount and rate, and see the difference.
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The amount you plan to borrow, not the home price.
The full rate on your loan, before any buydown. Enter the rate from your own quote or loan estimate.
Buydown type
A 3-2-1 lowers your rate 3, 2 and 1 points over three years. A 2-1 lowers it 2 and 1 points over two years. A 1-0 lowers it 1 point for the first year only.
Loan term
ESTIMATED PAYMENT, PRINCIPAL AND INTEREST
Year 1
–
Year 2
–
Year 3
–
Years 4 and on
–
ESTIMATED SELLER CREDIT NEEDED
$0
The total buydown cost: the difference, over the buydown period, between the full-rate payment and the lower payments. It is often funded by a seller credit, or by the builder, lender or buyer, and set aside at closing. The lender sets the actual figure.
THE FULL PICTURE
This shows principal and interest only. Taxes, insurance, HOA dues and mortgage insurance are extra. Casa Clara, our free Miami home-cost app, adds them for you.
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A buydown depends on your loan program, lender and who is funding it. Tell us about your purchase and we will check what is available.
How a temporary buydown works.
01
The rate steps down.
In a 3-2-1, year 1 is 3 percentage points below your note rate, year 2 is 2 points below and year 3 is 1 point below. A 2-1 starts 2 points below, and a 1-0 is 1 point below for the first year only.
02
Someone funds the difference.
The buydown amount is paid at closing, often by the seller, builder or lender, and held to cover the lower payments.
03
Then the full rate applies.
After the buydown period you pay the full note rate. A buydown does not change your note rate or loan balance, and refinancing later is never guaranteed.
Realtors: a buydown can be one way to put a seller credit to work. Talk to us before you write the offer, because the structure depends on the loan program and its contribution limits.
Common questions.
Is a buydown the same as a lower interest rate?
No. It is temporary. Your payment is lower for the first one to three years, then it is based on your full note rate for the rest of the loan.
Who pays for a buydown?
It is negotiable. Sellers, builders and lenders sometimes fund it, and buyers can too. Lender and loan program rules limit how much an interested party can contribute.
Does a buydown help me qualify for a bigger loan?
Often not. Many lenders qualify you at the full note rate, not the lower early payments. Ask us how your loan would be reviewed.
Can I use a buydown on any loan?
Not always. Availability depends on the loan program, occupancy, property type and lender.