Temporary Buydown

2-1 Buydown

Temporary buydown programs like the 2-1 buydown are gaining traction again. A temporary buydown lets sellers offer buyers lower mortgage payments for the first 1–3 years, helping buyers manage costs and feel more confident moving forward.

What's a Temporary Buydown Subsidy?

A temporary buydown is a seller-paid strategy that reduces the buyer's interest rate—and their monthly payment—for the first one to three years of the loan.

Lower initial payment

This lower initial payment can make a big difference in monthly affordability, buyer confidence, and getting buyers off the fence to say yes to a home that might feel just out of reach.

How it works

In a 2:1 buydown, the interest rate is reduced by 2% in the first year and by 1% in the second year compared to the full note rate.

• In the third year and beyond, the interest rate goes up to the original fixed rate for the remainder of the loan.

For example, if your final loan rate is 6%:

• Year 1: 4% interest

• Year 2: 5% interest

• Year 3–30: 6% interest

Who pays?

Typically, either the seller, builder, or lender pays the buydown cost upfront as an incentive. Sometimes buyers can pay it too, but it’s usually negotiated into the deal.