A 3-2-1 buydown can create three different introductory payment levels. Seeing the progression matters because the lowest first-year payment is not the payment you will keep for the life of the loan.
Run Your Comparison →A typical 3-2-1 structure bases the borrower payment on a rate three percentage points below the mortgage rate in year one, two points below in year two and one point below in year three. The full scheduled payment begins after the subsidy period.
The first-year number is useful for cash-flow planning, but buyers should also evaluate whether the full payment fits comfortably once the temporary subsidy ends.
A temporary buydown and a permanent interest-rate reduction are different. Enter the actual mortgage rate and promotional-year rates you were quoted so the comparison reflects the structure being offered.