Temporary vs. Permanent Rate Buydown: Understanding the 2-1 Buydown

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In today’s housing market, buyers are gaining more leverage, and sellers are responding with creative incentives. One popular tool is the 2-1 buydown, a temporary reduction in mortgage payments during the first two years of a loan. This strategy is particularly useful when interest rates are elevated but expected to decline. Melissa Cohn, regional vice president at William Raveis Mortgage, explains: “A 2-1 buydown offers a temporary reduction in payments, giving buyers breathing room until rates may fall or they can refinance.” So, what exactly is a 2-1 buydown? It’s an agreement that lowers t