In short
A temporary buydown lowers your mortgage payment for the first year or few years using money paid up front, often by the seller or builder. A 1-0, 2-1 or 3-2-1 sets the payment at one, two or three points below the note rate on a step-up schedule. The note rate itself does not change.
Reviewed by Ron Pippin, NMLS #218333 · Last updated October 21, 2026
How does a 1-0, 2-1 or 3-2-1 buydown work?
A temporary buydown uses money paid up front, often by the seller or builder, to subsidize your payment for the first part of the loan. With a 1-0, your first-year payment is based on a rate one percentage point below your note rate. With a 2-1, it's two points below in year one and one point below in year two. With a 3-2-1, it steps through three, two and one point below over the first three years. Once the subsidy ends, you pay the full scheduled principal-and-interest payment. Your note rate never changes. Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
Key takeaways
A temporary buydown lowers your mortgage payment for the first year or few years of the loan, and it's often paid for by the seller or builder. It can give you breathing room while you settle into a new home in Ogden. But the early payment is only half the story. I'll show you what you pay in every year of the buydown and after it ends, and compare a buydown with other ways to use the seller's credit. The plan has to work with the full payment, not depend on a future refinance.
Temporary Buydowns in Ogden, UT
The first year or two in a new home can be expensive. You're moving, furnishing, fixing things you didn't know needed fixing. A temporary buydown can lower your payment during that stretch, then step up to the full payment on a set schedule.
It's a useful tool. It's also easy to misunderstand. So let's walk through how it works, who usually pays for it, and what I check before I'd recommend one.
How Each Buydown Works
Every temporary buydown starts with your note rate. That's the rate on your mortgage, and it doesn't change. The buydown doesn't lower it. Instead, money set aside at closing covers part of your payment for the first year or few years.
- 1-0 buydown. In year one, your payment is based on a rate one percentage point below your note rate. From year two on, you pay the full scheduled payment.
- 2-1 buydown. In year one, your payment is based on a rate two points below your note rate. In year two, one point below. From year three on, the full payment.
- 3-2-1 buydown. Your payment steps through three, two and one point below your note rate over the first three years. From year four on, the full payment.
After the subsidy ends, you pay the full scheduled principal-and-interest payment for the rest of the loan. Not a big deal if you planned for it. A real problem if you didn't.
Who Pays for It?
The money for a buydown is paid up front. It's often funded through a seller or builder contribution as part of the purchase. That's why buydowns come up most when a seller or builder is offering credits to help close the deal.
Here's the part people skip. Seller credits can be used in more than one way. They might fund a buydown. They might cover closing costs. Depending on the loan and the deal, there may be other options too. I'll tell you the difference and compare a buydown with the other uses of that money, so you can pick the one that helps you most.
I'll Show You the Payment at Every Stage
Before you agree to a buydown, you should see your payment in year one, year two, year three and beyond. Not just the low one. The full payment, including taxes, insurance, any mortgage insurance and HOA dues.
The question I always ask is simple. What payment will work for you? If the full payment only works when everything goes perfectly, that's a warning sign. You still need room to live after you make the house payment.
Don't Count on a Refinance
Some people choose a buydown planning to refinance before the full payment kicks in. Maybe that happens. Maybe it doesn't. I can't promise where rates or home prices will go, and neither can anyone else. Your plan should work with the full scheduled payment, with or without a future refinance. If it does, a buydown can be a nice bonus. If it doesn't, we should look at a different approach.
Why Work With Me
I've been doing this for nearly 30 years, including time inside banks and large mortgage companies. As an independent broker, I compare offers from multiple lenders, because different lenders can give different answers on the same borrower. I'll explain why I'm recommending a buydown or not, and what you give up or gain either way.
You'll have my number. Call or text me with questions anytime. Let's run some numbers together and see if a buydown fits your purchase.
This page is general education only. It is not an offer or commitment to lend, and the examples here do not reflect current interest rates. Buydown availability, program rules and terms change and depend on your loan and your purchase. Call or text me for details that fit you.
Quick facts
- Buydown types
- 1-0, 2-1 and 3-2-1
- 1-0
- Year 1: one point below the note rate
- 2-1
- Year 1: two points below; year 2: one point below
- 3-2-1
- Three, two and one point below over the first three years
- Note rate
- Does not change
- Often funded by
- Seller or builder contribution
Is this loan right for you?
Who it's for
- Eligible buyers who want a lower payment in the first years of the loan
- Buyers whose seller or builder is offering a contribution toward the purchase
- Buyers who can comfortably afford the full payment once the subsidy ends
- Anyone who wants to compare a buydown with other uses of seller credits
Who it may not fit
- Buyers who can only afford the payment during the buydown years
- Anyone counting on a future refinance to make the full payment workable
- Buyers who would get more value using the seller credit another way, such as toward closing costs
Pros and cons
Pros
- Lower payments in the early years while you settle into your home
- Often funded through a seller or builder contribution
- A clear, scheduled step-up, so you know exactly what's coming
- Your note rate stays the same for the life of the loan
Trade-offs to weigh
- Your payment rises to the full scheduled payment when the subsidy ends
- Seller credit used for a buydown can't also be used for other costs
- It can tempt buyers into a payment that only works in the early years
Frequently asked questions
Does a temporary buydown change my interest rate?
No. Your note rate stays the same for the life of the loan. The buydown subsidizes your payment for the first part of the loan, as if the rate were lower. After the subsidy ends, you pay the full scheduled principal-and-interest payment.
What's the difference between a 1-0, 2-1 and 3-2-1?
I'll tell you the difference. A 1-0 gives you one year with a payment based on one point below your note rate. A 2-1 gives two points below in year one and one point below in year two. A 3-2-1 steps through three, two and one point below over three years. Longer buydowns cost more up front.
Who pays for the buydown?
It's paid up front, and it's often funded by the seller or builder as part of the purchase. I'll compare a buydown with other ways to use that seller credit, like covering closing costs, so you can see which one helps you most.
Should I plan to refinance before the payment goes up?
I wouldn't build your plan around it. Nobody can promise where rates or home prices will go. Your budget should work with the full scheduled payment. If a refinance makes sense later, great. But you shouldn't need one.
What will my rate be?
Your rate depends on your scenario and the day's market. Reach out and I'll price it for real, and I'll show you your payment in every year of the buydown and after it ends.
Related loan programs
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Last updated October 21, 2026 · Reviewed by Ron Pippin, NMLS #218333. This page is educational and not a commitment to lend; program details change — ask for current figures.