You may be hearing the term “Buy Down” if you are considering financing a home in 2023 and beyond. There are a couple different options within the buy down world for home loans and we’re here to break it down in easy digestible terms. We are here to explain what a 2-1 Buydown Home Loan is and how it all works!


What does BUY DOWN Mean? 

Let’s use a 30 year conventional home loan as an example as that’s the most popular term and the lowest monthly payment typically. 

With a buy down, the rate that you qualify for is temporarily lowered for the first 2 years (or 3 years) based on the program you go with. That short term is what is being “bought down”.

Who’s Buying Down the Loan?

The seller is. This is also known as Seller Concessions. 

In Realtor terms, seller concessions are closing costs that are paid by the seller in the final contract.

Think of it as an incentive to the BUYER. Currently, the real estate market in Arizona is in a BUYERS Market. That means the buyer has a bit of an advantage when negotiating final numbers on a home sale. 

What is a 2-1 Buydown?

The first year of the loan is given a 2% rate reduction and the second year it’s given a 1% reduction.

Let’s say you qualify for a rate of 6% on your home loan. The first year of that loan your rate will be “bought down” by 2% and the second year it will be bought down by 1%. Then back to the 6% for the remaining term of the loan.

What are the BENEFITS of a Buy Down Loan?

You will have a lower payment those first years! Another perk: you can refinance at ANY TIME if the rates start to go down again. 

If you do refinance in those buydown years, those funds remaining will go towards a lower payoff.

What is the difference between a 2-1 Buydown and a 3-2-1 Buydown?

The 3-2-1 is a three-year buydown term and the 2-1 is a two-year buydown term. The pricing will be different on each program. We advise you to look into both of these products as your options.

Where can I get more information on this AMAZING loan product?

Need a visual? Here’s a quick 2 minute video with our CEO Chad Hansen sharing a LIVE example on how this product works! 

Call Us! At Mohave Mortgage, we do our best to not overcomplicate home lending. It’s not rocket science, but we also know it can be incredibly intimidating, especially if you are a first-time home buyer.

We pride ourselves on giving honest advice for YOUR home loan scenario. Let us navigate the gauntlet of loan programs to give you sound options for home ownership in Arizona! As a Mortgage Broker it’s what we do best.

Tall on Integrity, Short on Fees – That’s how we do business!

Mohave Mortgage – click here to meet the TEAM!


387 S Lake Havasu Ave

Lake Havasu City, AZ 86403

Terms and Conditions apply. Not all borrowers will qualify. Mohave Mortgage NMLS#1830581 AZ-MB-1001852 CFL 60DBO-150071