Mortgage Buydown 2-1 vs 3-2-1 Calculator
A 2-1 buydown lowers your rate 2% in year 1 and 1% in year 2. A 3-2-1 lowers it 3% / 2% / 1%. The seller funds an escrow that subsidizes payments. Compare both formats and the cost premium.
| Note rate payment | — |
| 2-1: Year 1 payment | — |
| 2-1: Year 2 payment | — |
| 2-1 total seller credit | — |
| 3-2-1: Year 1 payment | — |
| 3-2-1: Year 2 payment | — |
| 3-2-1: Year 3 payment | — |
| 3-2-1 total seller credit | — |
A temporary buydown reduces your mortgage payment for the first 1-3 years using a seller-funded escrow. The 2-1 format cuts the rate by 2% in year 1 and 1% in year 2. The 3-2-1 format cuts by 3% / 2% / 1% in years 1, 2, 3. The seller pays the full subsidy at closing. You qualify on the full note rate, so DTI is unaffected.
How Temporary Buydowns Work
At closing, the seller funds a buydown escrow account equal to the sum of monthly subsidies for the buydown period. Each month, the lender draws from the escrow to cover the gap between the discounted payment and the full note-rate payment. After the buydown period ends, you pay the full note rate for the rest of the loan. The escrow is non-refundable to the seller — if you refinance early, the unused balance applies to your principal. This makes early refinance attractive when rates drop.
2-1 vs 3-2-1 Decision
2-1 buydown costs roughly 2.5-3.5% of the loan amount and is the most common builder concession in today's market. 3-2-1 buydown costs 4-5% — meaningful seller concession but provides three years of payment relief. Choose 3-2-1 when (a) the builder has aggressive concessions available, (b) you expect rates to drop and plan to refinance in years 2-3, or (c) you want maximum payment relief during a job transition or early-career income ramp. Choose 2-1 when you want the lower seller cost or when refinance opportunity is uncertain.
Last updated May 2026. Sources: CFPB Mortgage Guide.