why our team loves 3-2-1 buydowns
Buydowns make homeownership more approachable by lowering your payments upfront, giving you time to grow into your mortgage and creating breathing room for other expenses (like furniture, savings, or life in general). Plus, when sellers or builders cover the cost, it's a win-win: more affordable for the buyer, more attractive for the seller.
3-2-1 Buydowns At A Glance
A 3-2-1 buydown is a temporary interest rate reduction that makes your mortgage payments more affordable during the first three years of your loan. It’s a great option if you're expecting your income to increase, or you just want to ease into your monthly payments.
How it works
- Year 1: Interest rate reduced by 3%.
- Year 2: Rate reduced by 2%.
- Year 3: Rate reduced by 1%.
- Year 4+: Loan returns to full note rate for the remainder of the term.
- Typically Paid By: Seller, builder, or lender (not added to your loan balance).
3-2-1 Buydown Guidelines
- Loan Type: Often on fixed-rate conventional, FHA, and VA loans.
- Eligible Buyers: Must qualify at the full note rate.
- Program Duration: 3 years of temporary rate reductions.
- Funding Source: Usually paid by seller, builder, or lender (not borrower).
- Property Type: Primary residences and sometimes second homes.
3-2-1 Buydown Pros
- Lower Initial Payments: Eases the transition into paying for a home.
- Great For Growing Incomes: Ideal if you expect income increases over time.
- Can Be Seller-Funded: Helps in negotiations on new construction or resale homes.
- Smooth Budget Transition: Predictable payment increases over three years.
Best for…
First-time buyers
Growing families or early-career professionals
Buyers negotiating seller concessions
Anyone wanting to ease into a mortgage
Free Guides & Resources
Our favorite kind of buyer? A confident one. Brush up on your loan knowledge, get an accurate quote, and let's get to it.
