2-1 Buydown Calculator
Calculate your potential savings with a 2-1 temporary buydown program
Expert 2-1 Buydown Guidance
Maximize your savings with professional buydown analysis
Quick answer
A 2-1 buydown is a mortgage program that reduces your interest rate by 2% in year one and 1% in year two, then returns to the full rate in year three and beyond. This calculator helps you determine if the upfront buydown cost is worth the monthly payment savings based on your specific situation and expected home tenure.
Calculate Your 2-1 Buydown
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Can be paid by buyer, seller, or lender credit
Rate Assumption: Displayed rates assume a 740+ credit score. Your rate may vary based on your credit profile and loan details.
Monthly Payment Breakdown
Savings Analysis
Get Expert Analysis
Want a detailed analysis with current rates and personalized recommendations? Our loan experts can help you determine if a 2-1 buydown is right for your situation.
What is a 2-1 Buydown?
A 2-1 buydown is a temporary mortgage rate reduction program that lowers your interest rate for the first two years of your loan:
- •Year 1: Interest rate is reduced by 2% below the note rate
- •Year 2: Interest rate is reduced by 1% below the note rate
- •Year 3+: Interest rate returns to the full note rate
Who Can Pay for the Buydown?
- • Buyer: Pay upfront to reduce monthly payments
- • Seller: Concession to help close the sale
- • Lender: Credit toward closing costs
- • Builder: Incentive for new construction
When Does a 2-1 Buydown Make Sense?
✅ Good Scenarios:
- • You expect income to increase over the next 2-3 years
- • Interest rates are expected to decline in the future
- • Seller is willing to pay for the buydown as a concession
- • You need lower initial payments to qualify for the loan
- • Short-term cash flow relief is important
❌ Not Ideal When:
- • You plan to sell or refinance within 2 years
- • The buydown cost exceeds the payment savings
- • You prefer to use the funds for a larger down payment
- • Current rates are already at historic lows
Important Considerations:
- • Payments will increase after the buydown period
- • Qualification is based on the full note rate payment
- • Not all loan programs allow buydowns
- • Consider opportunity cost of the buydown funds
2-1 Buydowns in California
Market Considerations
- • High home prices make payment reduction more impactful
- • Competitive market tool for both buyers and sellers
- • Particularly useful in luxury home purchases
- • Can help with conforming loan limit challenges
Regulatory Notes
- • Must comply with California real estate disclosure laws
- • TRID (TILA-RESPA) disclosure requirements apply
- • All costs must be clearly disclosed at application
- • Cannot be used to artificially inflate home prices
Get Professional 2-1 Buydown Analysis
Every situation is unique. Our licensed mortgage professionals can provide personalized analysis to determine if a 2-1 buydown is the right strategy for your California home purchase.
Important Disclaimers
• This calculator provides estimates for educational purposes only. Actual loan terms, payments, and costs may vary based on your specific situation, credit profile, and market conditions.
• 2-1 buydowns are not available on all loan programs. Availability depends on the lender, loan type, and current market conditions.
• You must qualify for the loan based on the full note rate payment, not the reduced buydown payment.
• Interest rate and payment estimates are based on current market assumptions and may change. Contact a licensed loan officer for personalized rate quotes and program availability.
• All costs, terms, and savings should be verified with your lender before making any financial decisions.