Mortgage Guides
2-1 Buydown Mortgage: How to Buy Down Your Rate for the First Two Years
6 min read · 2025-06-15
Sellers and builders are offering 2-1 buydowns to close deals. Here's whether they're worth it for buyers.
A 2-1 buydown is a seller concession that temporarily reduces your mortgage interest rate for the first two years of the loan. In a high-rate environment, builders and motivated sellers have been using buydowns to make their listings more attractive to rate-sensitive buyers.
How a 2-1 Buydown Works
If your actual loan rate is 6.75%, a 2-1 buydown means: Year 1 at 4.75% (2% below note rate), Year 2 at 5.75% (1% below), Year 3 and beyond at 6.75% (full note rate). The seller or builder pays the cost of the reduced payments upfront as a lump sum held in escrow.
The Real Cost of a 2-1 Buydown
On a $400,000 loan at 6.75%, a 2-1 buydown costs the seller roughly $8,900 upfront. Year 1 savings for the buyer: ~$483/month. Year 2 savings: ~$246/month. Total buyer benefit: ~$8,748 — essentially the same as the seller's cost.
A 2-1 buydown doesn't actually save money — it just moves it. You'd often be better off asking the seller for a $9,000 price reduction and using it to buy actual discount points on your permanent rate.
When a 2-1 Buydown Makes Sense
- You expect income to grow in years 1–2 (new job, promotion, business ramp-up)
- You plan to refinance within 2 years if rates drop
- The seller is offering it at no cost to you (as a closing cost concession)
- New construction where the builder is absorbing the cost to move inventory
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