What Is a 2-1 Buydown?

With mortgage rates hovering between 6.5% and 7% in mid-2025, many buyers feel priced out of the market. But there’s a smarter path forward. At TurboHome, we help buyers take advantage of a powerful financing tool (the 2-1 buydown) and we pay for it. Here's how it can save you thousands while giving you breathing room in your first two years of homeownership.

What Is a 2-1 Buydown?

A 2-1 buydown is a temporary interest rate reduction built into the early years of your mortgage. Your interest rate is reduced by 2 percentage points in the first year and 1 point in the second year, before reverting to the original rate for the remainder of the loan term.

Example Scenario:
Let’s say your loan qualifies for a 6.5% fixed rate.

• Year 1: You pay at a 4.5% rate
  
  
• Year 2: You pay at a 5.5% rate
  
  
• Year 3 onward: Your rate resets to 6.5%

This reduction can equate to monthly savings of $500–$800 or more on a median loan of $500,000—totaling over $15,000 in the first two years.

How Does a 2-1 Buydown Work?

The buydown is funded by a credit at closing, typically covered by the seller, builder, or lender. That credit pre-pays the difference in interest, giving you lower monthly payments without altering your loan’s fixed terms.

Key Mechanics:

• Your loan is underwritten at the full note rate (e.g., 6.5%), ensuring long-term stability..
  
  
• You pay less up front, freeing cash for furniture, upgrades, or reserves.
  
  
• No additional cost to you when the buydown is covered through TurboHome’s lender network.
  
  

This structure is ideal for buyers expecting future income growth or planning to refinance if rates decline.

Why Do Buyers Love 2-1 Buydowns?

A 2-1 buydown creates real financial breathing room when it matters most. Whether you're adjusting from renting, covering moving costs, or planning upgrades, the early savings help ease the transition into homeownership. Certain benefits for the offer include, but are not limited to:

• Immediate Payment Relief: Smoother financial transition into homeownership.
• Greater Budget Flexibility: Allocate funds toward renovations, moving expenses, or reserves.
• Stronger Offers in Competitive Markets: Especially valuable in high-cost areas like California or Washington, where even a 1% rate change can impact monthly payments by $400+.
  
  

What Happens If You Refinance?

One potential advantage of a 2-1 buydown is the opportunity to refinance before the full interest rate takes effect in year three - but it depends on several factors.

Here’s what to consider:

• In most 2-1 buydown setups, you’ll pay the reduced interest rates in Years 1 and 2.
• If market rates happen to drop during that time, and you still meet the lender’s qualifications (credit, income, home equity, etc.), you may be able to refinance into a lower long-term rate.
• In that case, you could avoid ever paying the full note rate—but refinancing isn’t guaranteed.

How can I take advantage of a 2-1 BuyDown with TurboHome?

TurboHome Covers the Cost of Your 2-1 Mortgage Buydown—For Free

Most homebuyers interested in a 2-1 buydown will have to pay $10,000-$30,000 out of pocket. If you are a TurboHome customer, we cover the cost of the buydown.

How does it work?

1. TurboHome earns a large seller-paid commission when we help you buy your dream home
2. TurboHome uses part of that commission and pays for your 2-1 buydown.
3. You get to choose your lender (we have a preferred network, but you are free to choose and shop around)
4. Your interest rate is 2% lower in the first year and 1% lower in the second year.

By combining a 2-1 buydown with our flat-fee buyer commission model, you’re saving on both financing and representation—keeping more equity in your future home.

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Is a 2-1 Buydown Right for Me?

It can be a powerful way to ease into homeownership—but every buyer’s financial situation is different. Interest rates, lender programs, and available credits can change quickly, and TurboHome’s ability to offer this benefit depends on factors like loan size, lender participation, and seller-paid commissions. This content is for informational purposes only and not intended as financial, legal, or tax advice. We always recommend consulting with a licensed mortgage or financial professional to determine what works best for your goals and budget.

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FINAL TAKE: A smarter path to ownership

The 2-1 buydown can be a strategic financial tool that helps reduce initial homeownership costs, improve cash flow, and boost affordability in a high-rate market.

When paired with TurboHome’s flat-fee model and expert support, you get a competitive edge that few traditional approaches can match.

If you’re ready to buy smarter, let’s talk about how TurboHome and a 2-1 buydown can work for you.

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