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 both 2-1 and 3-1 buydowns — including on jumbo and bank statement loans — and I’ll run both scenarios side-by-side so you can make an informed choice. Call (800) 239-1103.
You’ve heard about buydown mortgages, but your lender is only offering a 2-1. Does the 3-1 buydown actually make a meaningful difference? The short answer: yes — especially on California’s larger loan amounts where a single percentage point of rate relief translates to significant monthly dollars.
The Core Difference: 2-1 vs. 3-1
Both buydowns temporarily reduce your mortgage rate using funds deposited by the seller at closing, and both step back up to the full note rate over time. The difference is how much reduction and for how many years. The 2-1 reduces your rate by 2% in Year 1 and 1% in Year 2, then returns to the note rate in Year 3. The 3-1 reduces by 3% in Year 1, 2% in Year 2, and 1% in Year 3, returning to the note rate in Year 4. The 3-1 gives you a bigger reduction in Years 1 and 2, plus a full third year of payment relief — which is critical if you’re waiting for rates to drop enough to refinance.
Side-by-Side Comparison: $1,000,000 Loan at 7.0%
Year 1 — 2-1 rate: 5.0%, payment ~$5,368/month. 3-1 rate: 4.0%, payment ~$4,774/month. Extra monthly savings with 3-1: ~$594. Year 2 — 2-1 rate: 6.0%, payment ~$5,996. 3-1 rate: 5.0%, payment ~$5,368. Extra savings: ~$628. Year 3 — 2-1 rate: 7.0% (full), payment ~$6,653. 3-1 rate: 6.0%, payment ~$5,996. Extra savings: ~$657. On a $1,000,000 California loan, the 3-1 buydown saves an additional $22,548 over three years compared to the 2-1. The 3-1 also costs the seller approximately $22,000–$24,000 more to fund.
Which Is Better?
The right choice depends on what the seller will contribute and how long you expect to be at the note rate before refinancing. Choose the 3-1 if the seller has room to contribute more, you want maximum Year 1 relief, or you’re not confident rates will drop enough to refinance within two years — that third year of cushion matters. Choose the 2-1 if the seller’s contribution is fixed and you need to allocate some of it to closing costs or repairs, or if you’re highly confident rates will drop within two years giving you a clear refinance window before hitting the full rate.
Frequently Asked Questions — 3-1 vs 2-1 Buydown in California
How much does a seller need to contribute for a 3-1 vs. 2-1 buydown?
The cost depends on the loan amount and rate. On a $1,000,000 California loan at 7.0%, a 2-1 buydown typically costs the seller $30,000–$35,000 while a 3-1 costs $52,000–$58,000. On a $640,000 loan, those figures scale down proportionally. I calculate the exact buydown cost for any loan amount before you make your offer so you know what to ask for in negotiations.
Can I get a 3-1 buydown on a jumbo loan in California?
Most lenders only offer 2-1 buydowns on conforming loan amounts. DiVita Home Finance offers the 3-1 buydown on jumbo loans — including on bank statement loans for self-employed borrowers. This is particularly valuable for luxury California buyers financing $1.5M+ properties, where the Year 1 savings on a 3-1 vs. 2-1 can exceed $600–$700/month on the difference alone.
What if I refinance before the buydown period ends?
If you refinance before the buydown escrow is exhausted, the remaining unused buydown funds are typically returned to you as a principal reduction on your new loan — you don’t lose them. This is one of the reasons buydowns are genuinely risk-free from the buyer’s perspective when seller-funded: you get the payment savings upfront, and if rates drop early, you refinance and recover any remaining funds.
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
