Temporary rate buydown in San Diego (2-1 explained)
Quick answer: A temporary buydown (often called a 2-1) uses money at closing to subsidize a lower payment for the first one or two years. After the subsidy period, you pay the full note rate. It is not the same as buying discount points that permanently lower the note rate. This page explains the structure. It does not invent a rate or a monthly savings number.
Buyers hear "2-1 buydown" and think the note rate itself drops forever. That is not how a temporary buydown works. Someone (often the seller, builder, or you) funds a subsidy at closing. That pot covers the difference between the note payment and a lower payment for year one and year two. When the pot runs out, the payment steps up to the note rate that was always on the loan.
How a 2-1 temporary buydown usually works
- Year 1. Payment is calculated as if the rate were about 2 percentage points under the note rate. The subsidy account pays the gap.
- Year 2. Payment steps up to about 1 percentage point under the note rate. Subsidy covers that gap.
- Year 3 and after. Full note rate payment. No more subsidy.
- Who funds it. Seller credit, builder incentive, or buyer cash at closing. Program and concession caps still apply. See seller credits and loan amount.
Temporary buydown vs discount points
Discount points buy the note rate down for the life of the loan (or until you refinance). A temporary buydown does not change the note rate. It only subsidizes early payments. Opposite tools. Head-to-head on cash vs rate structure: discount points vs lender credits.
What still has to fit on the file
Underwriting still qualifies you. Many programs qualify at the note rate, not the year-one subsidized payment. Cash to close still equals down payment plus closing costs minus credits. Loan amount still follows the 2026 San Diego County 1-unit high-cost conforming line of $1,104,000. Baseline $832,750. Jumbo generally above $1,104,000. VA full entitlement is not capped the same way. Confirm on loan limits.
When a temporary buydown can make sense
Short-term payment relief while income rises, a seller or builder is already offering credits, or you want room in year one without permanently buying points. It is not lock advice and not a published rate. We put both paths on a Loan Estimate. Start at get pre-approved San Diego. Company NMLS 2394495. Amir Nurani NMLS 197458. San Diego County and Riverside County. Call (619) 366-9494.
Frequently asked questions
A structure where a subsidy at closing lowers the payment for year one (about 2 points under the note rate) and year two (about 1 point under), then the full note rate applies. The note rate itself does not permanently drop.
No. Points permanently buy the note rate down. A temporary buydown only subsidizes early payments. See discount points vs lender credits.
Often the seller or builder through a credit, sometimes the buyer with cash at closing. Concession caps still apply by program. We do not invent a dollar amount here.
Many programs qualify at the note rate, not the subsidized year-one payment. We confirm on your file. Call (619) 366-9494.
Want a temporary buydown on a real Loan Estimate?
Tell us price, down payment, and whether a seller credit is on the table. We show temporary buydown vs points without inventing a rate.
Get Pre-Approved(619) 366-9494 · Amir Nurani · NMLS #197458
Left Coast Leaders, Inc. · NMLS #2394495 · DRE #02191517 · Equal Housing Lender · San Diego County and Riverside County · San Diego, CA