Allen Markel, REALTOR® · Texas Premier Realty

Buying

2-1 buydown

The payment in years 1, 2 and 3+, and what the buydown costs — usually a seller or builder concession.

The permanent rate on the loan — you qualify at this one. Today's 30-year average: 7.40% (Freddie Mac survey via FRED, week of Oct 8, 2026). Edit to your lender's quote.

What the buydown costs — and saves

$8,304 buydown cost

Year 1 payment (at 5.40%)
$1,965/mo
Year 2 payment (at 6.40%)
$2,189/mo
Year 3 on, the note rate (7.4%)
$2,423/mo
First-year savings
$458/mo

The $8,304 is the sum of every month’s difference, paid up front into an escrow that tops up your payment. That money is almost always a seller or builder concession written into the contract — not your cash. Refinance or sell early and the unused escrow usually goes to the loan balance.

See homes where the seller offers concessions →

Live listings whose agent flagged seller-paid concessions.

We’re not a lender. A temporary buydown does not change the note rate or what you qualify for; a permanent buydown (points) does — compare on Points vs. down payment. Concession caps (3–9% of price, by loan type and down payment) limit how much a seller can pay. Your lender prices the escrow exactly.

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These are the lenders Allen works with. For any lender you’d like to talk to, tap Make introduction — we’ll make the introduction for you.

Allen Markel is a licensed Texas REALTOR®, not a mortgage lender or loan originator. He does not quote rates or terms and does not decide whether you qualify — only a lender can do that. Introductions are a courtesy; you choose who to work with.

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Questions about Buydown

What it does

  • What does the 2-1 buydown calculator show?

    It shows your monthly payment in year one, year two and from year three on, plus what the buydown costs and what you save in the first year. A temporary buydown lowers the rate for the early years and then the loan settles at the permanent note rate, so you can see the step up before you agree to one.

The inputs

  • What is the note rate in the buydown calculator?

    It is the permanent rate on the loan, and the one you qualify at. The page starts it from the current 30-year average and lets you edit it to a lender's quote. The reduced rates in the early years are measured from this rate, so entering your real quote gives a more useful result.

  • What do the 2-1, 1-0 and 3-2-1 options mean?

    They describe how much the rate is lowered in the early years. The 2-1 lowers it two points in year one and one point in year two. The 1-0 lowers it one point in year one. The 3-2-1 lowers it three, two and one points over the first three years. After that, the payment is at the note rate.

Reading the result

  • Who pays for a buydown?

    The page says the cost is almost always a seller or builder concession written into the contract, not your cash. It is paid up front into an escrow that tops up your payment during the early years. Whether a seller will agree is negotiated in the offer, so talk to us about how that might work on a specific home.

  • What does the buydown cost figure represent?

    It is the sum of every month's difference between the reduced payment and the full payment during the buydown period. That amount is funded up front. Your lender prices the escrow exactly, so use the calculator number as an estimate and confirm it before you build it into an offer.

  • What happens to the payment after the buydown ends?

    From year three on, the payment is at the full note rate, which is the highest of the payments shown. Plan your budget around that number, not the lower early payments. A buydown gives temporary relief, so think about whether your finances will comfortably handle the step up.

  • What if I refinance or sell during the buydown?

    The page says the unused escrow usually goes to the loan balance in that case. The details depend on the loan and the contract. If you think you may move or refinance early, ask your lender how any unused funds would be handled before you agree to it.

Limits

  • Does a temporary buydown change what I qualify for?

    No. The page says a temporary buydown does not change the note rate or what you qualify for, while a permanent buydown through points does. If you want a lower rate for the life of the loan, compare it on the Points vs. down payment calculator. A lender can confirm how your file is evaluated.

  • Is there a limit on how much a seller can pay?

    Yes. The page notes that concession caps, which run between 3% and 9% of the price depending on loan type and down payment, limit how much a seller can contribute. Your lender can confirm the cap for your loan. Ask early, because it affects how a buydown can be structured in your offer.

Next steps

  • How do I find homes where a seller might offer a buydown?

    The page links to live listings whose agent flagged seller-paid concessions. That is a good place to start looking, though any seller can be asked in an offer. Talk to us about how to structure the request and whether a buydown or another concession fits your situation.

  • Should I choose a buydown or a lower price?

    It depends on your plans and finances. A buydown helps your early payments but does not change the long-term rate, while a lower price reduces the loan for good. The right choice depends on how long you will keep the loan and your budget, so talk to us and a lender to compare them for your circumstances.

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