2-1 Buydown Mortgage
A 2-1 buydown uses prefunded money to reduce the borrower's payment by two rate-equivalent points in year one and one point in year two.
Temporary mortgage payment subsidies, permanent rate buydowns, and the mechanics of 2-1 and 3-2-1 schedules.
Mortgage buydowns use upfront funds either to obtain a lower contractual rate or to subsidize payments for a limited period. The distinction determines the note rate, qualification, payment path, and appropriate cost comparison.
Start with Mortgage Buydown for the permanent-versus-temporary distinction. Temporary Mortgage Buydown explains funding, account custody, underwriting, and payment obligations.
Use 2-1 Buydown Mortgage or 3-2-1 Buydown Mortgage for schedule-specific calculations. For points that lower the note rate, use Permanent Mortgage Buydown.
Temporary buydowns are not adjustable-rate mortgages. A reduced opening contribution is not a guaranteed path to refinancing or future affordability. This content is educational and is not individualized mortgage, legal, tax, or financial advice.
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A 2-1 buydown uses prefunded money to reduce the borrower's payment by two rate-equivalent points in year one and one point in year two.
A 3-2-1 buydown uses prefunded money to reduce the borrower's payment by three, two, and one rate-equivalent points during the first three years.
A mortgage buydown uses upfront funds either to purchase a lower note rate or to subsidize scheduled payments for a limited opening period.
A temporary mortgage buydown uses prefunded money to reduce the borrower's opening payments while the contractual note rate and full payment obligation remain in place.