What does 3-2-1 mean?

Year 1 rate is 3% lower than permanent, year 2 is 2% lower, year 3 is 1% lower, year 4+ is permanent rate.

Who pays for the buydown?

Typically the seller as a concession. Sometimes builders cover it on new construction.

Is this the same as paying points?

No - points permanently buy down the rate. Buydowns are temporary, refundable if you refi out.

Are there other buydown structures?

Yes - 2-1, 1-0, and fixed-rate buydowns. We'll match the structure to your goals.

Loan option

Seller-Paid Buydown

A seller-paid buydown reduces your effective interest rate during the first 1-3 years of the loan - easing into homeownership during the most cash-strapped years.

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What Seller-Paid Buydown actually is.

In a high-rate environment, a temporary buydown is often the most overlooked path to monthly affordability. Sellers and builders use buydowns as a creative concession that benefits the buyer without dropping the sale price.

The most common structure is 3-2-1: your effective rate is 3 percentage points lower in year one, 2 lower in year two, 1 lower in year three, then settles at the permanent rate from year four on.

Buydown funds are held in escrow and effectively prepay part of your interest. If rates drop and you refi out, unused buydown funds return to the seller - but you keep the lower payments you already received.

Illustrative sample figures for a template demonstration. Not a rate quote, not an offer to lend, and not live market data.

Who this fits

Buyers nervous about today's rate environment
Newly relocated buyers with first-year transition costs
Anyone negotiating for seller concessions in slower markets
Move-up buyers stretching budget temporarily

Check whether you qualify

What this program buys you.

Lower Year-One Payments: 3-2-1 buydown drops rate by 3%, 2%, 1% in years 1, 2, 3.
Seller-Funded: Cost is paid by the seller as a concession - common in slower markets.
Permanent Rate Stays Available: After buydown period, rate returns to permanent locked rate.
Refinance Optionality: If rates drop, you can refi out during the buydown period.

The process

Four moves from first call to keys.

Each step has one job and one owner. You always know which of the four the file is sitting in.

01Negotiate ConcessionYour agent negotiates the buydown as part of the offer.
02Lock Permanent RateLock the underlying 30-year rate.
03Seller Funds EscrowBuydown funds escrowed at closing.
04Reduced PaymentsEnjoy 1-3 years of reduced payments before rate steps to permanent.

Questions this program raises.

If yours is not here, ask it. You will get an answer in writing from the officer who would work the file.

Other programs

Get this priced against your own file.

Tell us the scenario and we will come back with real figures for Seller-Paid Buydown, and for the programs you did not ask about, so you can see all of them at once.