buydowncomparison3-2-12-1
3-2-1 Buydown vs 2-1 Buydown: Which is Better?
January 5, 20263-2-1 Buydown vs 2-1 Buydown
Both buydown types reduce your initial mortgage payments, but they work differently.
How They Compare
2-1 Buydown
- Year 1: Rate is 2% lower
- Year 2: Rate is 1% lower
- Year 3+: Full rate
3-2-1 Buydown
- Year 1: Rate is 3% lower
- Year 2: Rate is 2% lower
- Year 3: Rate is 1% lower
- Year 4+: Full rate
Cost Comparison
On a $400,000 loan at 7%:
| Buydown | Total Cost | Year 1 Savings |
|---|---|---|
| 2-1 | ~$9,300 | ~$514/month |
| 3-2-1 | ~$17,500 | ~$763/month |
When to Choose Each
Choose 2-1 Buydown When:
- Seller concessions are limited
- You expect to refinance within 2 years
Choose 3-2-1 Buydown When:
- Maximum first-year savings is priority
- You have more concession dollars available
Calculate Both Options
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