I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I offer 3-1 buydowns — including on jumbo and bank statement loans — for buyers across California who want to make today’s rates work. Call (800) 239-1103.
If you’re buying a home in California right now and today’s mortgage rates feel like a stretch, a 3-1 buydown mortgage might be the strategy that makes your purchase work — and your payment manageable for the first three years while you wait for rates to improve.
How a 3-1 Buydown Works
A 3-1 buydown temporarily reduces your mortgage interest rate for the first three years of the loan. Funds are deposited into an escrow account at closing — typically by the seller — and used each month to cover the difference between your reduced payment and the full payment. Year 1: your rate is 3% below your note rate. Year 2: 2% below. Year 3: 1% below. Year 4 onward: the permanent note rate. If your note rate is 7.0%, you pay 4.0% in Year 1, 5.0% in Year 2, and 6.0% in Year 3. The expectation is that rates drop enough during those three years to justify refinancing before you hit the full rate.
3-1 Buydown Payment Example: $800,000 California Home
Based on a $640,000 loan (20% down on $800,000 at 7.0% note rate): Year 1 at 4.0% — approximately $3,056/month, saving $1,052/month vs. the full rate. Year 2 at 5.0% — approximately $3,437/month, saving $671/month. Year 3 at 6.0% — approximately $3,837/month, saving $271/month. Year 4+ at 7.0% — approximately $4,108/month. Total savings over three years: approximately $24,000. For buyers stretching to afford a California home, that Year 1 savings of over $1,000/month can be decisive.
Who Pays for the Buydown?
In today’s California market, most buydowns are seller-funded. Sellers who want to move a home often prefer contributing to a buydown instead of dropping the asking price — because a price reduction shows up on comparable sales and affects neighborhood values, but a seller concession for a buydown does not. Builders of new homes in the Bay Area, Marin County, Napa, and Southern California routinely offer 3-1 buydowns as standard purchase incentives. Less commonly, lenders or buyers fund the buydown themselves.
3-1 Buydown vs. Asking for a Price Reduction
On an $800,000 home with a $640,000 loan, the 3-1 buydown costs the seller approximately $24,000 to fund. A $25,000 price reduction only saves the buyer about $133/month over the life of the loan — far less impactful than the $1,052/month savings in Year 1. For buyers who plan to refinance when rates drop, the buydown almost always delivers more value than an equivalent price cut. I help clients frame this in their offers to give sellers the right context.
Frequently Asked Questions — 3-1 Buydown Mortgage California
What happens if rates don’t drop and I don’t refinance after a 3-1 buydown?
You simply transition to your note rate in Year 4 — the rate you would have been paying from day one without the buydown. You’re no worse off than if you had taken a standard loan at that rate. The buydown gave you three years of lower payments at no additional cost to you, assuming the seller funded it. There’s no penalty, no reset, no balloon — just the permanent rate you agreed to at closing.
Can I get a 3-1 buydown on a jumbo loan in California?
Yes — DiVita Home Finance offers 3-1 buydowns on jumbo loans. Most lenders only offer 2-1 buydowns on conforming loans. I have wholesale relationships with jumbo lenders that permit buydown structures, which matters for California buyers financing $1.5M–$3M+ properties. On a $1.5M home with a $1.2M loan, a 3-1 buydown can save $2,800–$3,000/month in Year 1 — a significant cash flow advantage in the early years of ownership.
Can I combine a 3-1 buydown with a bank statement loan?
Yes — and this is a combination most California mortgage brokers cannot offer. DiVita Home Finance can structure a bank statement loan (qualifying on 12–24 months of deposits rather than tax returns) combined with a 3-1 buydown. This is particularly valuable for self-employed California buyers with strong cash flow but significant write-offs on their tax returns. Call me directly to discuss whether your income situation qualifies.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
