PATRICK'S QUICK ANSWER
The payment steps up twice: it rises after year one and again after year two, then sits at the full note rate. A 3.49% year-one rate on a 2-1 buydown usually settles around 5.49% from year three on, and the monthly payment can climb by several hundred dollars. Buy a buydown only if your income will cover the step-ups. Ask Patrick whether the step-ups fit your budget.
A 2-1 buydown is a two-year discount, not a two-year loan term. Year one runs 2% below the note rate, year two runs 1% below, and year three starts the full note rate for the remaining life of the loan. Nothing is forgiven and nothing readjusts: the payment simply climbs the staircase the buydown built.
The year-by-year math
On a $427,500 loan at note rate 5.49%, a 2-1 buydown gives you 3.49% in year one, 4.49% in year two, and 5.49% from year three on. The principal and interest payment runs about $1,917 in year one, then about $2,163 in year two, then about $2,425 in year three. That is roughly a $500 monthly step-up between year one and year three, and it is permanent for the rest of the loan. The exact numbers depend on your price, down payment, and the note rate, so run your own figures before you sign.
Who should take a builder's 2-1 buydown
Take it when your income is scheduled to grow in the first two years, when you are cash-tight now and confident later, or when the builder funds the buydown for free as part of the incentive. Skip it if your payment at the note rate already stretches your budget, because the step-up will not wait for a promotion. The full breakdown of builder buydown offers, verified with their APRs, is in the San Antonio Builder Incentives, Decoded guide, and the calculator there shows the 5-year cost of a 2-1 versus every other structure.
Not sure the step-ups fit your budget?
Patrick will run the 5-year schedule on the actual offer and tell you whether the buydown works for your income, or whether the permanent rate wins.
Ask Patrick about your 2-1 buydown
Get the year-by-year schedule on the actual offer and whether the step-ups fit your income.
