Temporary Rate Buydown
A 2-1 or 3-2-1 buydown uses a seller credit to temporarily buy down your mortgage rate during the first few years of the loan.
2-1 Buydown
Using a — note rate:
Seller credit needed
≈ —
Based on a $1,000,000 purchase with 20% down.
Principal & interest only. Eligibility and seller-contribution limits vary by loan program.
Standard picks conventional, high-balance or jumbo from your loan amount.
Jumbo and Non-QM loans are priced loan by loan, so this calculator uses the rate you’ve been quoted instead of guessing.
Already negotiating a credit? Enter it to see whether it covers the buydown.
Example 30-year fixed rate from Today’s Rates.
Seller credit needed
—
approx., for this 2-1 buydown
Jumbo temporary buydown eligibility and pricing can vary. Run this scenario with Derek.
Let’s talk details2-1 buydown
The seller credit needed is the payment savings above, added up.
Seller-funded temporary buydowns are subject to applicable interested-party contribution limits and loan-program requirements. For conventional loans, the limit shown is the typical guideline for a primary residence at this loan-to-value, measured against the purchase price (lenders use the lower of price or appraised value). It covers every seller-paid cost combined — the buydown, closing costs and prepaids. Not every borrower, property or loan qualifies for every buydown structure.
Let’s look at the actual numbers together and figure out how much seller credit would be needed for the buydown — before you write the offer.
I’ll look at your buydown scenario and come back to you personally with what it would really take for your loan. If you’d rather talk sooner, text me at 323.823.7913.
Rates are illustrative examples from Today’s Rates and change with market conditions and your borrower profile. Calculations are estimates of principal and interest only on a 30-year fixed loan; they do not include taxes, insurance, mortgage insurance or HOA dues.
The buydown cost is the sum of the monthly payment differences during the buydown period, before any lender or escrow-specific rounding or fees. Temporary buydown availability varies by loan program and lender. Where required by the loan program, you qualify using the full note-rate payment, not the reduced payment.
This is not a Loan Estimate, pre-approval, approval or commitment to lend. All loans subject to credit and underwriting approval, property eligibility and applicable program guidelines. Equal Housing Lender.
Buyers often assume a price reduction automatically creates the biggest monthly savings. Here’s the same $20,000 both ways, using the scenario above.
A seller credit can sometimes create significantly more short-term payment relief than reducing the purchase price by the same amount. A price reduction lowers the loan and the payment permanently. Neither one is always better.
The right choice depends on:
You find the property you want to buy.
Work out the purchase price, down payment, loan amount, current rate and the approximate cost of the buydown. That tells you approximately how much credit it would take to fund it.
If the 2-1 buydown costs about —, Derek and your real estate agent can decide how much seller credit to request in the offer, within your loan program’s limits.
Don’t guess at the seller credit. Run the financing first so you know what the buydown actually costs.
Your agent includes the negotiated seller credit in the offer and purchase agreement as appropriate. Derek can provide the financing numbers before the offer is written, so you and your agent know exactly what you’re asking for and why.
The agreed seller credit is applied at closing to fund the temporary buydown, according to your loan program’s requirements.
When the buydown period ends, your payment moves to the amount based on your actual note rate: —/mo from Year 3 on.
A 2-1 buydown does not permanently change a — mortgage into a — mortgage. In this example:
This is a temporary payment reduction, not a permanent rate reduction.
The reduced payment is temporary. Where the loan program requires it — and most do — qualifying is based on the full note-rate payment (—/mo here) rather than the Year 1 payment (—/mo).
That’s not a catch, just how the tool is meant to be used. A buydown gives you lower payments during the first few years — room to settle in, furnish the house or let your income grow. It isn’t designed to make a payment you couldn’t otherwise qualify for fit.
Want to know where you’d land? The Income Cheat Sheet shows the income needed at each price using the full payment.
Jumbo & Non-QM
Temporary buydowns may also be available with certain:
The basic idea is the same. But whether a buydown is allowed, which structures are offered, the seller-contribution limit, how you qualify and the pricing all vary by lender and program — so not every jumbo or Non-QM loan will allow one.
Have a quote? Choose Bank Statement / Non-QM in the calculator, or enter a price that puts you in jumbo territory, and type in your quoted note rate.
A 2-1 buydown lowers your mortgage payment for the first two years. In Year 1 your payment is figured at 2% below your note rate, in Year 2 at 1% below, and from Year 3 on you pay the normal note-rate payment for the rest of the loan. It’s paid for with a seller credit at closing.
Example: a — home with 20% down at — would pay about — a month in Year 1 instead of —.
You negotiate a seller credit in your offer. At closing, that credit temporarily buys down your rate: 2% lower in Year 1 and 1% lower in Year 2. From Year 3 on, you pay the normal note-rate payment for the rest of the loan.
It costs the total of the payment savings. Take the normal note-rate payment, subtract the lower Year 1 payment and multiply by 12, then do the same for Year 2 and add the two together. That is roughly the seller credit needed. It is not a flat percentage of the loan; it depends on your loan amount and your rate.
Using today’s example rate and the same $1,000,000 home with 20% down, a 2-1 buydown on that — loan is about —.
If the seller is funding it, enough to cover the buydown cost, which is the total of the payment reductions over the two years. Run the numbers before you write the offer so the credit you ask for matches the real cost, and make sure the credit, together with any other seller-paid costs, fits within your loan program’s seller-contribution limit.
A 3-2-1 buydown works the same way over three years. Year 1 is figured at 3% below your note rate, Year 2 at 2% below, Year 3 at 1% below, and from Year 4 on you pay the full note-rate payment. It gives a bigger break up front, and it costs more to fund.
The same math, over three years instead of two: add up the monthly payment differences for Years 1, 2 and 3. Because the first year is a full 3% lower and there is an extra year of savings, a 3-2-1 typically costs roughly twice what a 2-1 does on the same loan.
Using today’s example rate and the same $1,000,000 home with 20% down, a 3-2-1 buydown on that — loan is about —.
For the buydown shown on this page, the seller does, through an eligible seller credit you negotiate in your offer. The credit is applied at closing, and it has to fit within your loan program’s seller-contribution limit.
The seller agrees to a credit in the purchase contract, instead of or alongside a lower price. At closing, that credit is applied to the buydown, which lowers your rate for the first two years. The credit has to be eligible under your loan program and fit within its seller-contribution limit.
A lower price reduces your loan, so your payment drops a little every month for as long as you keep the loan. The same dollars used as a seller credit for a temporary buydown usually cut the payment much more, but only for the first two or three years. Neither is always better; it depends on your cash to close, how long you expect to keep the loan, your refinance plans and your loan program.
See the side-by-side for your numbers in Seller credit or lower price?
Generally, no. Where the loan program requires it, lenders qualify you using the full note-rate payment, not the lower Year 1 payment, because that is the payment you will make for most of the loan. A buydown makes the first years easier on your budget; it usually does not increase how much you qualify for.
Your payment moves to the normal note-rate payment and stays there for the rest of the loan. That payment is known from day one, and it is generally the one you qualified on, so you can plan your budget around it from the start.
It depends on what you need more. If cash to close is tight, putting the credit toward closing costs keeps more money in your pocket on day one. If the early payments are the pressure point, a buydown spreads the same credit over the first years. You can often split it, as long as the total stays within the seller-contribution limit for your loan.
A Loan Estimate shows your closing costs, so you can see how far a seller credit goes on each side.
A 3-2-1 gives a lower payment for longer, but it takes roughly twice the seller credit. A 2-1 costs less and still gives two years of breathing room. If the seller credit you negotiate covers a 3-2-1 and still fits under the contribution limit, it buys more relief; if not, a 2-1 is the more realistic ask.
A permanent buydown uses discount points to lower your note rate for the life of the loan. A temporary buydown leaves the note rate where it is and only lowers the first few years of payments. A permanent buydown tends to pay off if you keep the loan a long time; a temporary buydown helps most if you expect your income to rise or plan to refinance if rates drop.
Sometimes. Some jumbo lenders allow 2-1 and 3-2-1 buydowns and others don’t. Jumbo loans aren’t bound by one national rulebook, so each lender decides whether a buydown is allowed, how much the seller can contribute and how you qualify. Confirm it before you build an offer around one.
More on jumbo loans in Los Angeles.
Some bank statement programs allow a temporary buydown, though not all. The buydown itself works the same way; only the way your income is documented is different, using bank deposits instead of tax returns. Eligibility, seller-contribution limits and qualifying rules are set by each lender’s program.
More on bank statement loans.
Some can. Non-QM covers a range of programs, including bank statement, P&L-only, asset-based and DSCR loans, and each lender sets its own rules. Where a temporary buydown is allowed, the math is the same: the cost is the total of the payment reductions. Use your quoted note rate in the calculator to see the numbers.
More on Non-QM loans.
Refinancing may be possible during the buydown period. What happens to any unused buydown funds depends on your specific buydown agreement, your loan program and the applicable requirements; it isn’t handled the same way on every loan. Review the actual buydown agreement before making assumptions about unused funds.
Often not. Conventional guidelines generally limit temporary buydowns to a primary residence or second home, and seller contributions on investment properties are capped much lower. Some investor programs may allow it, but it is the exception, so confirm it before you count on it.
Buying a rental? See DSCR loans, which qualify on the property’s rent.
Keep going: Today’s Rates · Income Cheat Sheet · Loan Estimate · First-Time Buyer Guide · Conventional Loans · Payment Calculator
Last reviewed: October 2026
Negotiating a seller credit right now? I’ll check what your loan allows, how much of the credit a buydown would use, and whether it’s the best use of it.
