A 3-2-1 buydown temporarily lowers a buyer's mortgage rate for the first three years, then returns the loan to its original fixed rate afterward.
The buydown cost usually equals the buyer's early savings and is often covered by the seller, builder, or lender to support affordability.
These loans typically apply to primary and secondary homes, not investment properties, and they are not generally offered with shorter-initial-period adjustable-rate mortgages.
For buyers expecting higher income later, lower early payments can free cash for repairs or remodeling while preserving fixed-payment certainty after the reset.
Buyers should confirm fourth-year payments fit their budget, future income is realistic, and the home price was not padded to offset the incentive.