What is a seller-paid 2-1 buydown?

It is a temporary buydown funded through a permitted seller contribution that reduces the effective payment in the first two years before the borrower pays the full note-rate payment.

Are discount points permanent?

Discount points purchase a lower note rate that applies while the mortgage remains in place, unless it is later refinanced or paid off.

Should I use a seller credit for a 2-1 buydown or closing costs?

It depends on payment goals, cash needed at closing, program limits, and the alternative uses available. Compare all permitted options on aligned Loan Estimates.

Seller concession decision

Seller-paid 2-1 buydown vs discount points

A seller-paid 2-1 buydown lowers payments for two years. Discount points lower the note rate permanently. Compare them by who supplies the cash, what the payment becomes later, and how long you expect to keep the loan.

Reviewed by LenderCity Editorial Mortgage Team · Updated July 27, 2026

The decision

A seller-paid 2-1 buydown is usually about early cash-flow relief. Discount points are an investment in long-term payment savings.

If the seller is offering a fixed concession, also ask what that same money could do as a closing-cost credit or price reduction. The right comparison is not merely temporary versus permanent rate; it is every permitted use of the seller's contribution.

Side-by-side

Seller-paid 2-1 buydownDiscount points

Upfront sourceSeller contribution, subject to program limits.Usually borrower cash, though permitted contributions may help depending on rules.

PaymentReduced in years one and two, then rises to the note-rate payment.Lower note-rate payment for the life of the loan.

QualificationAgency rules generally use the full note-rate payment.Based on the actual reduced note rate, subject to underwriting.

Core calculationValue of the subsidy versus alternative seller concessions.Points cost divided by monthly savings.

Example decision

Suppose a seller offers $12,000. One option funds a 2-1 buydown; another applies the money to eligible closing costs. If you need cash preserved at closing, the closing-cost credit may be more valuable. If you can afford closing but value early payment relief, the 2-1 structure may fit. If you want permanent savings, ask the lender to quote the same scenario with discount points and calculate the break-even.

Do not assume seller-paid means free. Compare the negotiated home price and every alternative use of the seller contribution.

Ask for these three quotes

Zero-point baseline. The clean reference rate, payment, and lender-controlled cost.
Seller-funded temporary buydown. Show each year's payment and the subsidy deposit.
Permanent point option. Show points, reduced note rate, monthly savings, and break-even.

Use your numbers

Move from explanation to comparison.

Lenny can analyze a Loan Estimate or compare matched rate offers using the same cost-and-timeline logic.

Analyze an offer Compare matched rates

Official sources

Educational guidance only. Examples are hypothetical and do not include every loan cost or program rule. Final terms, pricing, eligibility, and disclosures must be confirmed by a licensed mortgage lender. Reviewed July 27, 2026.