⚡ 3-2-1 BUYDOWN CALCULATOR — $400K LOAN @ 6.89% NOTE RATE
Seller pays total: $18,792 upfront (deposited in escrow at closing)
| Period | Your Rate | Your Payment | Monthly Savings | Seller Pays (Annual) |
|---|---|---|---|---|
| Year 1 | 3.89% | $1,879 | $765/mo | $9,180 |
| Year 2 | 4.89% | $2,118 | $526/mo | $6,312 |
| Year 3 | 5.89% | $2,369 | $275/mo | $3,300 |
| Year 4–30 | 6.89% | $2,644 | $0 | $0 |
*P&I only. Adjust for your loan amount: divide savings by 400 then multiply by your loan in thousands.
3-2-1 Buydown Mortgage 2026: Year 1 Rate of 3.89% — Get the Seller to Pay the Whole Thing
On a $400K loan at 6.89%, a 3-2-1 buydown saves you $765/month in Year 1. The seller pays ~$18,792 upfront. You get 3 years of dramatically lower payments, then refinance if rates drop. Heads you win, tails you get your money back. Find lenders who accept seller-paid buydowns.
Your 3-2-1 Buydown Savings by Loan Amount
| Loan Amount | Year 1 Rate | Year 1 Monthly Savings | 3-Year Total Savings | Seller Pays Total |
|---|---|---|---|---|
| $250,000 | 3.89% | $478/mo | $11,700 | $11,745 |
| $350,000 | 3.89% | $669/mo | $16,380 | $16,443 |
| $400,000 | 3.89% | $765/mo | $18,720 | $18,792 |
| $500,000 | 3.89% | $956/mo | $23,400 | $23,490 |
| $600,000 | 3.89% | $1,147/mo | $28,080 | $28,188 |
*Based on 6.89% note rate. 3-2-1 buydown. P&I payments only.
Now that you have your number — here's how to make the seller pay it
Not every lender accepts seller-paid 3-2-1 buydowns. Find lenders who do, then use your offer to negotiate the concession. Compare lenders who accept seller concession buydowns — and use the exact negotiation script below.
Compare Buydown Lenders Now →The Seller Negotiation Script — Word for Word
📝 COPY THIS INTO YOUR OFFER
“Buyer requests seller to contribute [3-year buydown cost] toward a 3-2-1 temporary interest rate buydown on a 30-year conventional mortgage. Funds to be deposited into a buydown escrow account at closing per lender guidelines. Any unused buydown funds to be returned to buyer upon payoff or refinance.”
Why sellers say yes:
- • Dropping price by $18K loses them $18K permanently
- • A $18K buydown concession costs them $18K but makes your payment $765/month lower in Year 1
- • Psychologically easier — they don't “lose” on the price
- • In a slow market (30+ days on market), motivated sellers take it
3-2-1 vs 2-1 Buydown: Which Is Better for You?
| Factor | 3-2-1 Buydown | 2-1 Buydown |
|---|---|---|
| Year 1 Rate Reduction | 3% below note rate | 2% below note rate |
| Year 2 Rate Reduction | 2% below note rate | 1% below note rate |
| Year 3 Rate Reduction | 1% below note rate | Full note rate |
| Seller Cost ($400K) | ~$18,792 | ~$9,396 |
| Year 1 Monthly Savings ($400K) | $765/mo ✅ | $510/mo |
| Best For | Max first-year relief, growing income | Smaller concession ask, builders |
| Refinance Upside | More escrowed funds returned | Less escrowed funds returned |
Ask for the Buydown. Get the Best of Both Worlds.
Find lenders who accept seller-concession buydowns, get pre-approved, then negotiate hard. The seller pays, you save.
3-2-1 Buydown FAQ
What is a 3-2-1 buydown mortgage and how does it work?
A 3-2-1 buydown is a temporary mortgage rate reduction where the interest rate is 3% below the note rate in Year 1, 2% below in Year 2, 1% below in Year 3, and then returns to the full note rate for the remaining life of the loan. Example at 6.89% note rate: Year 1: 3.89% (you pay 3.89%, seller subsidizes the difference). Year 2: 4.89% (you pay 4.89%, seller subsidizes). Year 3: 5.89% (you pay 5.89%, seller subsidizes). Year 4–30: 6.89% (full note rate). The seller pays the cost upfront (deposited into an escrow account at closing). Each month, the difference between your payment and the full payment is drawn from that escrow. If you sell or refinance before Year 4, the remaining escrow balance is refunded to you.
How much does a 3-2-1 buydown cost the seller?
The 3-2-1 buydown cost depends on the loan amount. The seller is essentially pre-paying the interest rate subsidy for 3 years. Approximate costs: $300,000 loan: ~$10,800 seller cost. $400,000 loan: ~$14,400 seller cost. $500,000 loan: ~$18,000 seller cost. $600,000 loan: ~$21,600 seller cost. Exact calculation: Year 1 subsidy + Year 2 subsidy + Year 3 subsidy = total buydown cost. On $400K at 6.89% note rate: Year 1 (3%): $12,000/yr = $1,000/mo savings × 12 = $12,000. Year 2 (2%): $8,000/yr = $667/mo savings × 12 = $8,000. Year 3 (1%): $4,000/yr = $333/mo savings × 12 = $4,000. Total: ~$24,000. Sellers in slower markets are often willing to pay this instead of cutting the price.
When is a 3-2-1 buydown better than a 2-1 buydown?
3-2-1 buydown vs 2-1 buydown comparison: 3-2-1: Year 1 rate is 3% below note rate. Bigger first-year savings. Costs seller 50% more. Better if you need maximum payment relief immediately (buying at your budget limit). 2-1: Year 1 rate is 2% below note rate. Lower seller cost (~60% of 3-2-1). Better if you can afford Year 1 at note rate and mainly want Year 2/3 savings. In 2026, 64% of new builders offer 2-1 buydowns. 3-2-1 buydowns are more commonly negotiated in resale transactions where the seller is motivated. Best scenario for 3-2-1: Buying at the top of your budget. You expect income to grow by Year 4. Seller has been on market 30+ days and is motivated to negotiate.
What happens to the buydown funds if I refinance or sell early?
If you refinance or sell before the buydown period ends (before Year 4), the remaining unused buydown funds are returned to you as a credit. Example: You have a 3-2-1 buydown, and you refinance 18 months into the loan. Year 1 is fully used ($12,000). Months 13–18 of Year 2 are used ($4,000). Remaining Year 2 months + all of Year 3 = ~$10,000 returned to you. This buydown refund makes 3-2-1 buydowns almost risk-free — if rates drop, you refinance, get your money back, and lock a lower rate. This is why real estate agents often call 3-2-1 buydowns "heads I win, tails I don't lose" for buyers.
Related Rate Strategy Guides
Meet David
Refinance & Rate Specialist
David Rodriguez is a seasoned refinancing expert with over 10 years of experience in mortgage rate analysis and market trend forecasting. As a Certified Rate Lock Specialist, he has saved homeowners millions in interest payments through strategic refinancing timing. His expertise in Federal Reserve policy impact and mortgage-backed securities makes him a go-to expert for rate predictions and refinancing strategies.
EXPERTISE:
KEY ACHIEVEMENT:
Saved clients $50M+ in interest payments