---
title: "Temporary buydown — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/temporary-buydown/
---

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Mortgage & lending[All terms starting with T](/glossary/#letter-T)

# Temporary buydown

Also called: 2-1 buydown, 3-2-1 buydown, seller buydown

A prepaid subsidy that reduces the payment for the first year or two, after which the payment rises to the note rate.

In a 2-1 buydown, the payment is calculated at a rate two points lower in year one and one point lower in year two, then at the note rate thereafter. The subsidy is funded upfront (commonly by a seller or builder) and held in an escrow that releases each month.

Nothing about the note changes. The rate on your loan is the full rate from day one, and underwriting generally qualifies you at that rate, not the discounted one.

## Why it matters

The cost of a buydown is roughly the sum of the subsidized payments. If the seller is funding it, compare that against simply asking for the equivalent as a price reduction or permanent rate buydown.

## Put a number on it

This term is an input in the calculator below.

- [Temporary Buydown CalculatorModel 2-1, 3-2-1, or flat temporary payment subsidies (note rate stays fixed; cost ≈ subsidy sum).](/calculators/temporary-buydown/)

## Related terms

- [Discount pointsAn optional upfront fee paid to the lender in exchange for a permanently lower interest rate.](/glossary/discount-points/)
- [Seller concessionsMoney the seller contributes toward the buyer’s closing costs, capped by the loan program.](/glossary/seller-concessions/)
- [Interest rate (note rate)The percentage charged on your loan balance, the number your principal and interest payment is calculated from.](/glossary/interest-rate/)

## Go deeper

- [Who pays in year three](/blog/temporary-buydown-who-pays-year-three/)

## More in Mortgage & lending

- [Amortization](/glossary/amortization/)
- [APR (Annual Percentage Rate)](/glossary/apr/)
- [ARM (Adjustable-Rate Mortgage)](/glossary/arm/)
- [Cash-out refinance](/glossary/cash-out-refinance/)
- [Closing costs](/glossary/closing-costs/)
- [Conforming loan](/glossary/conforming-loan/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

[Talk to Ondo](/contact/)[Browse all terms](/glossary/)

Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. [Licensing and disclosures](/licensing/)