A 2-1 buydown lowers your mortgage rate by 2 percentage points in the first year and 1 point in the second, then returns to the full rate from year three. Someone, usually the seller or builder, pays the cost upfront into an account that covers the difference. It eases your first two years but doesn’t change your long-term rate, and you still need to qualify at the full payment.
An example
On a $400,000 loan at 6.75%:
| Year | Rate | Monthly principal and interest |
|---|---|---|
| 1 | 4.75% | about $2,087 |
| 2 | 5.75% | about $2,334 |
| 3 to 30 | 6.75% | about $2,594 |
The buydown costs roughly the total savings: about $6,100 in year one plus $3,100 in year two, or about $9,200.
Try it: 2-1 buydown calculatorSee your payments in each year and what the buydown costs for your loan and rate.Who pays
Sellers and builders often offer buydowns to attract buyers without cutting the price. The cost counts as a seller concession, within your loan’s limits; see the seller concessions calculator. You can also pay for it yourself, though that rarely beats a permanent rate reduction.
Buydown, price cut or points?
- 2-1 buydown: biggest help in the first two years. Good if you expect your income to rise or plan to refinance.
- Permanent points: lower the rate for the life of the loan. Better if you’ll keep the loan long; see the rate buydown break-even tool.
- Price cut: lowers the loan and payment a little for good, and helps if the appraisal is tight.
Things to know
- You qualify at the full rate, not the bought-down one, for most loans.
- If you refinance or sell early, unused buydown funds usually go toward your loan balance.
- Don’t count on a refinance: plan for the full payment in year three. Test it with the mortgage payment calculator.
Other variations exist, such as a 1-0 buydown (1 point off for one year) or 3-2-1 (three years).
Common questions
How does a 2-1 buydown work?
Your rate is 2 points lower in year one and 1 point lower in year two, then returns to the full rate; an upfront payment covers the difference.
Do I qualify at the bought-down rate?
For most loans, no; you qualify at the full rate.
Is a 2-1 buydown better than a price cut?
It helps more in the first two years; a price cut or permanent points help more if you keep the loan long.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.