# 2-1 buydown calculator, plus 3-2-1 and 1-0 temporary buydowns

Source: https://nobullshitloans.com/tools/temporary-buydown/
By Tyler Rood, Loan Officer, NMLS ID # 2064776, Edge Home Finance, LLC (NMLS ID # 891464). Updated 2026-11-09.

## The short answer

A temporary buydown, usually seller-paid, lowers your payment for one to three years before the full note rate takes over, and it costs the sum of those monthly savings. On $332,500 at an example note rate of 6.75%, a 2-1 buydown cuts the payment from about $2,157 to $1,734 in year one and $1,940 in year two, for about $7,660. On most programs you qualify at the full $2,157, so the savings are a cushion, not extra buying power.

A seller offers to buy down your rate, and the first-year payment looks great. This temporary buydown calculator shows the whole schedule: the payment in each discounted year, the full payment when it ends, and what the buydown costs, so you know what you're really getting and what the seller is really paying for it.

## 2-1 buydown meaning: year one, year two and after

Each number is a year, and how many points below your note rate you pay that year. A 2-1 on a 6.75% note pays like 4.75% in year one, 5.75% in year two and 6.75% from year three on. A 3-2-1 adds a third discounted year, starting three points down. A 1-0 gives you one year at a point below. Your note rate never changes; an account funded at closing makes up the difference each month.

| Year | 2-1 buydown | 3-2-1 buydown | 1-0 buydown |
|---|---|---|---|
| 1 | $1,734 (4.75%) | $1,540 (3.75%) | $1,940 (5.75%) |
| 2 | $1,940 (5.75%) | $1,734 (4.75%) | $2,157 (6.75%) |
| 3 | $2,157 (6.75%) | $1,940 (5.75%) | $2,157 |
| 4 and after | $2,157 | $2,157 | $2,157 |
| Cost of the buydown | $7,660 | $15,061 | $2,595 |

Principal and interest on $332,500, 30-year fixed, at an example note rate of 6.75%. Hypothetical.

## How to use the temporary buydown calculator

Three inputs:

- **Loan amount.** After your down payment. The $332,500 default is a $350,000 home with 5% down.
- **Full note rate.** The rate on your note, the one you pay once the buydown ends. Use an example from a real quote.
- **Buydown type.** 2-1, 3-2-1 or 1-0.

It runs a 30-year fixed unless you pick another term. Taxes, insurance and mortgage insurance sit on top of every year's payment; the [mortgage payment calculator](https://nobullshitloans.com/tools/mortgage-payment/) adds them.

## What it costs, and who pays

The cost is the total of the monthly savings. On the default 2-1, that's about $422 a month for year one and about $216 a month for year two.

**Worked example: Cost of a 2-1 buydown on $332,500 at 6.75%**
- Year 1 savings (4.75% instead of 6.75%): $5,065
- plus Year 2 savings (5.75% instead of 6.75%): $2,595
- equals: Cost of the buydown: $7,660
_Hypothetical example, figured from unrounded payments._


That money is paid at closing, usually by the seller or a builder as a concession written into the contract. It counts against your program's limit on seller money. On a conventional loan with less than 10% down, the seller can put in 3% of the price, $10,500 on a $350,000 home. The 2-1 fits at about 2.2% and leaves about $2,840 for closing costs. The 3-2-1, at about 4.3%, doesn't fit at 5% down conventional, though it would under FHA's 6% limit, which counts buydowns too. Here's [what a seller can pay and how to ask](https://nobullshitloans.com/buy/making-an-offer/).

## How to read your result

The big number is the cost. The pad lists the payment for each discounted year, then the full payment, which is the one you qualify at on most programs. Plan your budget around that full payment. If rates fall, the end of year two on a 2-1 is when to start watching for a refinance window, but treat that as a possibility, not a plan.

The same seller dollars can do four jobs: cut the price, pay your closing costs, buy the rate down permanently, or fund a temporary buydown. A price cut usually does the least for your payment. The full comparison is in [points, credits and buydowns](https://nobullshitloans.com/buy/points-and-buydowns/), and agents can see how I lay out the menu in [financing strategies that win offers](https://nobullshitloans.com/agents/winning-offers/).

**My take**
I used to call the 2-1 a gimmick, and I still don't like it for a buyer who budgets off the year-one payment. But somebody has to fund it, just not you, and it does move homes that have sat. So now I price every use of the seller's money on the same day, the 2-1, a permanent buydown, closing costs and a price cut, and you pick with real numbers in front of you.

## Frequently asked questions

### Do I qualify at the bought-down payment?

No. On most programs you qualify at the full note-rate payment from day one. That's the point of it. The early savings are a cushion while you settle in, not a way to stretch into more house.

### Who pays for a 2-1 buydown?

It's most often the seller or a builder, written into the contract as a concession, and the money sits in an account that tops up your payment each month. It counts against your loan program's limit on seller money. Somebody has to fund it, just not you, usually.

### Is a 2-1 buydown better than buying points?

It depends on how long you'll keep the loan. At my numbers, a buyer keeping the loan more than about four to five years usually does better turning the same seller money into a permanent rate cut, and a buyer who expects to refinance sooner does better with the 2-1. Run both here and in the [mortgage points calculator](/tools/mortgage-points/).

## Sources

- [Fannie Mae Selling Guide B2-1.4-04, temporary interest rate buydowns](https://selling-guide.fanniemae.com/sel/b2-1.4-04/temporary-interest-rate-buydowns)
- [Fannie Mae Selling Guide B3-4.1-02, interested party contributions](https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs)
- [HUD Handbook 4000.1 (Update 18), interested party contributions](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)

## Disclosures

Individual Originator: Tyler Rood, Loan Officer, NMLS ID # 2064776 (www.nmlsconsumeraccess.org). Licensed in NC, PA, TX and VA.
Edge Home Finance, LLC | NMLS ID # 891464 | www.nmlsconsumeraccess.org. Licensed in all U.S. states & D.C., EXCEPT New York. Edge Home Finance, LLC is a mortgage broker, not a direct lender or creditor. Virginia Broker License MC-7006. North Carolina Mortgage Broker License B-201539. Pennsylvania Mortgage Broker License 81041. Texas: Mortgage Company License, Department of Savings and Mortgage Lending.
Numbers on this page are illustrations, not offers. Any rate shown on this site is an example. Rates may change or may not be available at the time of loan commitment or lock-in.
Edge Home Finance, LLC is a private mortgage broker and is not affiliated with, endorsed by, or acting on behalf of or at the direction of the U.S. Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD), or any other government agency.
We do business in accordance with the Fair Housing Act and the Equal Credit Opportunity Act.