A 3/2/1 jumbo buydown lets you buy your rate down 3% in year one, 2% in year two, and 1% in year three — on a jumbo loan. Most lenders won’t do it. We do. If you’re buying a $1.5M–$4M home in Marin County, the Bay Area, or anywhere in California, this strategy can cut your first-year payment by $2,000–$5,000 per month while rates settle.

What Is a 3/2/1 Jumbo Buydown?

A temporary rate buydown reduces your mortgage rate for the first 1–3 years of your loan. With a 3/2/1 structure:

Year 1: Your rate is 3% below the note rate
Year 2: Your rate is 2% below the note rate
Year 3: Your rate is 1% below the note rate
Year 4+: Your rate is the full note rate for the remaining term

On a jumbo loan, the note rate is typically in the 6.5%–7.0% range. A 3/2/1 buydown means you’d start at 3.5%–4.0% in year one. On a $2M loan, that’s a payment difference of roughly $3,000–$4,500 per month in year one alone.

Why Most Lenders Won’t Do a 3/2/1 on Jumbo

Standard temporary buydowns (2-1 and 3-2-1) are well-established for conforming Fannie Mae and FHA loans. But for jumbo loans — loans above the conforming limit ($806,500 in most California counties, $1,149,825 in high-cost areas like Marin and San Francisco) — most lenders have internal restrictions that prevent them from offering temporary rate buydowns.

The reason is underwriting. Jumbo loans are portfolio products — the lender holds them on their own books rather than selling to Fannie Mae or Freddie Mac. Many portfolio lenders don’t build temporary buydown structures into their jumbo programs, or they require the full note rate to be used for qualification regardless.

At DiVita Home Finance, we work with jumbo investors who allow 3/2/1 and 2/1 buydowns. We’ve done it for buyers in Tiburon, Mill Valley, Belvedere, Ross, and across the Bay Area. If you were just told “we can’t do that on a jumbo,” call us.

3/2/1 Jumbo Buydown Payment Examples

Using a 6.75% note rate (30-year fixed jumbo):

Loan Amount	Year 1 Rate	Year 1 P&I	Year 4+ Rate	Year 4+ P&I	Year 1 Savings
$1,500,000	3.75%	$6,948/mo	6.75%	$9,730/mo	~$2,782/mo
$2,000,000	3.75%	$9,264/mo	6.75%	$12,974/mo	~$3,710/mo
$2,500,000	3.75%	$11,580/mo	6.75%	$16,217/mo	~$4,637/mo
$3,000,000	3.75%	$13,896/mo	6.75%	$19,461/mo	~$5,565/mo

Rates are illustrative. Contact us for current pricing.

Who Pays for the Buydown?

On a jumbo purchase, the buydown funds can come from:

The seller — negotiated as a seller concession. In a softening market, this is often easier to get than a price reduction.
The builder — new construction builders in California frequently offer buydowns as incentives.
The buyer — you can fund the buydown yourself if it fits your financial strategy.
A lender credit — in some structures, a lender credit can offset the cost.

Seller-paid buydowns on jumbo purchases are subject to concession limits — typically 6% of the purchase price for most jumbo programs. On a $2M home, that’s up to $120,000 in concessions, more than enough to fund a 3/2/1 buydown.

Can You Do a 3/2/1 Buydown on Fannie Mae and FHA?

Yes — and we do both.

Fannie Mae (conventional): Allows 3/2/1 and 2/1 temporary buydowns on conforming and high-balance loans. Seller concessions up to 3%–9% depending on down payment.
FHA: FHA guidelines allow temporary rate buydowns. The buydown must be funded by an acceptable source (seller, builder, or third party). Down to 3.5% down payment, which makes an FHA 3/2/1 buydown extremely effective for buyers with limited cash.
Jumbo (portfolio): We work with investors that allow buydowns on non-conforming jumbo loans — the product most lenders don’t offer.

Is a 3/2/1 Jumbo Buydown Right for You?

This strategy makes the most sense when:

You’re buying in a high-rate environment and expect rates to drop or your income to rise
You want maximum cash flow in years 1–3 (great for business owners, commission earners, or anyone with variable income)
You can negotiate a seller concession to fund it
You want to qualify at a lower effective rate (ask us — qualification rules vary by program)

Talk to Michael DiVita

I’ve been structuring jumbo buydowns for Bay Area buyers for over 20 years. If you were told “we can’t do that on a jumbo” — come talk to me. 📞 (800) 239-1103 | Cell: (310) 849-9124

3/2/1 Jumbo Buydown California | DiVita Home Finance