Mortgage Strategy Guide

Master the Art of Mortgage Buydowns

Unlock the secrets to reducing your monthly payments and saving thousands over the life of your loan with strategic buydown techniques

3-2-1
Buydown Structure
$500+
Monthly Savings
5 Min
Read Time
Equitable Lending Experts
Published • 5 min read
Home Blog 3-2-1 Buydown Guide
5 minute read

What is a 3-2-1 Mortgage Buydown and How Can It Save You Money?

A 3-2-1 mortgage buydown is a strategic financing technique that temporarily reduces your interest rate for the first three years of your home loan. The rate starts 3% below market in year 1, 2% below in year 2, and 1% below in year 3, before returning to the full market rate.

Key Insight

3-2-1 buydowns are particularly powerful for homebuyers expecting income growth or facing temporary cash flow constraints during the early years of homeownership.

Understanding 3-2-1 Buydown Structure

3-2-1 Buydown Example

$400K Loan at 7% Market Rate

Year 1
4.0% Rate
$1,910/mo
Year 2
5.0% Rate
$2,147/mo
Year 3
6.0% Rate
$2,398/mo
Year 4+
7.0% Rate
$2,661/mo

Total 3-Year Savings

vs. Full Market Rate

Year 1 Savings: $9,012
Year 2 Savings: $6,168
Year 3 Savings: $3,156

Total Savings: $18,336

Why Choose a 3-2-1 Mortgage Buydown?

Strategic advantages that make 3-2-1 buydowns a smart financing choice

Massive Early Savings

Save over $18,000 in the first three years compared to the full market rate payment.

Easier Qualification

Qualify based on the lower Year 1 payment, making homeownership more accessible.

Cash Flow Freedom

Free up cash for home improvements, emergency fund, or other investments.

Income Growth Buffer

Perfect for professionals expecting salary increases or career advancement.

Seller/Builder Funded

Often funded by sellers or builders as a purchase incentive at no cost to you.

Rate Protection

Shield yourself from high rates during the crucial first years of homeownership.

Ready to Explore 3-2-1 Buydown Options?

Our mortgage experts will analyze your situation and show you exactly how much you can save with a 3-2-1 buydown approach.

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Related Resources & Next Steps

Continue your 3-2-1 buydown education journey with these helpful resources and tools