Seller Paid Rate Buydown 2026: 2-1 Buydown Complete Guide (Save $400/Month)
SMART STRATEGY: Seller pays $5K-$10K to lower your mortgage rate for 2 years! 2-1 buydown = 2% lower Year 1, 1% lower Year 2, full rate Year 3+. Example: 6.75% rate → 4.75% Year 1 (save $400/month), 5.75% Year 2 (save $200/month), 6.75% Year 3+. Seller pays at closing, not you! How to get: Negotiate in offer ("Seller to pay 2-1 buydown"). Best for: New construction, slow markets, motivated sellers. Get pre-approved with buydown option. Related: Mortgage points calculator.
💰 2-1 Buydown Savings Example:
$400K Loan at 6.75%: $2,595/month (P&I)
Year 1 (4.75%): $2,087/month = Save $508/month!
Year 2 (5.75%): $2,335/month = Save $260/month!
Year 3+ (6.75%): $2,595/month (full rate)
Total 2-Year Savings: $9,216 ($508×12 + $260×12)
⏰ Seller pays $9,216 at closing. You pay $0!
What is a Seller Paid Rate Buydown? (Simple Explanation)
📚 Rate Buydown Explained:
Rate buydown = paying money upfront to lower your mortgage interest rate temporarily (1-3 years) or permanently. Seller paid = seller pays this cost at closing, not you!
Most Common: 2-1 Buydown
Year 1: Rate is 2% LOWER than note rate
Year 2: Rate is 1% LOWER than note rate
Year 3+: Full note rate (no discount)
Example: 6.75% note → 4.75% Year 1, 5.75% Year 2, 6.75% Year 3+
💡 Key Benefit:
Lower payments Years 1-2 give you breathing room to: (1) Adjust to homeownership costs, (2) Save emergency fund, (3) Hope rates drop for refinance. Seller pays, so it's FREE money for you!
🎯 Ready to Negotiate a Buydown?
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Types of Rate Buydowns (2026)
| Buydown Type | Year 1 | Year 2 | Year 3+ | Cost |
|---|---|---|---|---|
| 2-1 Buydown | -2% | -1% | Full rate | $9K-$12K |
| 1-0 Buydown | -1% | Full rate | Full rate | $3K-$5K |
| 3-2-1 Buydown | -3% | -2% | -1% then full | $18K-$25K |
| Permanent Buydown | -0.25% | -0.25% | -0.25% | $4K per 0.25% |
💡 Which Buydown is Best?
- 2-1 Buydown: BEST for most buyers. Balanced savings ($9K-$12K cost).
- 1-0 Buydown: Good if seller won't pay much ($3K-$5K cost).
- 3-2-1 Buydown: Rare. Only new construction builders offer ($18K-$25K cost).
- Permanent Buydown: Better to refinance later if rates drop.
Real Example: 2-1 Buydown on $400K Loan
Scenario: $400K Home Purchase
Loan Details:
Purchase Price: $400,000
Down Payment (5%): $20,000
Loan Amount: $380,000
Note Rate: 6.75%
Buydown: 2-1 (seller paid)
Year 1 (4.75%)
Rate: 4.75%
Monthly P&I: $1,983
vs Full Rate: $2,464
Save: $481/month
Year 1 Total: $5,772 saved
Year 2 (5.75%)
Rate: 5.75%
Monthly P&I: $2,218
vs Full Rate: $2,464
Save: $246/month
Year 2 Total: $2,952 saved
Year 3+ (6.75%)
Rate: 6.75%
Monthly P&I: $2,464
vs Full Rate: $2,464
Save: $0/month
Full rate resumes
💰 Total Buydown Value:
- Year 1 Savings: $5,772 ($481 × 12 months)
- Year 2 Savings: $2,952 ($246 × 12 months)
- TOTAL 2-YEAR SAVINGS: $8,724
- Seller Pays: $8,724 at closing (you pay $0!)
⏰ Negotiate a Buydown in Your Offer!
Get pre-approved with buydown option. Save $400/month Year 1!
Get Pre-Approved Free →Free application • No obligation • Buydown experts
How to Negotiate Seller Paid Buydown (Step-by-Step)
Step 1: Get Pre-Approved with Buydown Option
Before making offers: Get pre-approved and ask lender: "Do you offer 2-1 buydowns?" Most lenders do, but confirm first.
Step 2: Include Buydown in Offer
Offer language: "Seller to pay for 2-1 temporary buydown at closing, estimated cost $9,000-$12,000."
Tip: Don't ask for buydown + other concessions (repairs, closing costs). Pick ONE to maximize acceptance.
Step 3: Negotiate if Seller Counters
If seller says no: Offer to split cost (you pay $5K, seller pays $5K) OR ask for 1-0 buydown instead ($3K-$5K cheaper).
Tip: Emphasize: "Buydown helps me qualify and makes your home more attractive to buyers."
Step 4: Lender Calculates Exact Cost
After offer accepted: Lender calculates exact buydown cost based on loan amount, rate, and buydown type. Seller pays this amount at closing (added to seller's closing costs).
Step 5: Close & Enjoy Lower Payments! 🎉
At closing: Seller pays buydown cost ($9K-$12K). You pay $0 extra. Your Year 1 payment is 2% lower! Congratulations! You just saved $400/month Year 1!
When to Ask for Seller Paid Buydown
✅ BEST Situations:
- New Construction: Builders LOVE buydowns (use them as marketing tool)
- Slow Market: Home on market 60+ days = motivated seller
- High Rates: 6.5%+ rates = buydown makes home affordable
- Seller Motivated: Job relocation, divorce, inherited home
- Overpriced Home: Seller won't drop price but will pay buydown
- Multiple Offers: Buydown request makes your offer stand out
❌ DON'T Ask When:
- Hot Market: Multiple offers = seller won't negotiate
- Priced Right: Home priced at market value = no room
- Cash Offers: Competing with cash = you'll lose
- Already Asking Concessions: Repairs + closing costs + buydown = too much
- Low Rates: If rates <5%, buydown less valuable
Pros & Cons: Seller Paid Rate Buydown
✅ PROS (Why Get Buydown?)
- Lower Payments: Save $400/month Year 1, $200/month Year 2
- Seller Pays: $0 cost to you (seller pays at closing)
- Easier Qualifying: Lower Year 1 payment = lower DTI
- Breathing Room: Adjust to homeownership costs Years 1-2
- Refinance Option: If rates drop, refinance before Year 3
- No Commitment: Can refinance anytime (no penalty)
❌ CONS (Downsides)
- Payment Shock: Year 3 payment jumps $400/month
- Temporary: Only 2 years of savings, then full rate
- Seller May Refuse: Not guaranteed, depends on negotiation
- Lost Equity: Seller could've dropped price instead
- Qualification Risk: Must qualify at FULL rate, not buydown rate
- Refinance Costs: If you refinance Year 2, pay closing costs again
Buydown vs Price Reduction: Which is Better?
Comparison: $10K Buydown vs $10K Price Drop
$10K Seller Paid Buydown
Purchase Price: $400,000
Loan Amount: $380,000
Year 1 Payment: $1,983 (4.75%)
Year 2 Payment: $2,218 (5.75%)
Year 3+ Payment: $2,464 (6.75%)
2-Year Savings: $8,724
$10K Price Reduction
Purchase Price: $390,000
Loan Amount: $370,500
Year 1 Payment: $2,402 (6.75%)
Year 2 Payment: $2,402 (6.75%)
Year 3+ Payment: $2,402 (6.75%)
Lifetime Savings: $62/month × 360 = $22,320
💡 Which is Better?
- Buydown BETTER if: You need lower payments NOW (Years 1-2) to qualify or adjust to homeownership.
- Price Drop BETTER if: You're staying long-term (10+ years) and want lifetime savings.
- Reality: Sellers prefer buydown (doesn't lower comp value). Ask for buydown first, price drop second.