Two strategies for a lower initial payment on a Marin County jumbo: the 3/2/1 buydown and interest-only. They work completely differently — here’s the side-by-side comparison for 2026.
The 3/2/1 Buydown
A 3/2/1 buydown is a temporary rate reduction for years 1–3, funded upfront by the seller. The note rate doesn’t change — a subsidy account covers the difference in years 1–3. After year 3, you pay the full note rate for the life of the loan.
Marin County example: $2.5M purchase, $2M jumbo at 6.875% note rate. Year 1 effective rate: 3.875% ($9,389/month). Year 2: 4.875% ($10,570/month). Year 3: 5.875% ($11,815/month). Year 4+: 6.875% ($13,119/month). Cost to fund the buydown: ~$35,000–$42,000 from seller.
Interest-Only Jumbo
An interest-only loan requires only interest for the first 5–10 years (IO period), then converts to fully amortizing. You’re not paying down principal during the IO period, but you’re also keeping maximum cash in hand.
Same Marin County example: $2M jumbo at 7.125% IO rate. IO payment: $11,875/month for 10 years. Principal + interest after IO period: $15,840/month (amortized over remaining 20 years).
The Key Difference
Buydown: starts very low, rises to market rate in year 4. Short-term cash flow optimization with a predictable endpoint. Interest-only: consistently low for 5–10 years, then a larger payment jump. Long-term flexibility with more risk at IO conversion.
Which Is Right for Marin Jumbo Buyers?
3/2/1 buydown: best if you want maximum short-term savings and expect to refinance before year 4 (common assumption in Marin). Interest-only: best if you want consistent lower payments for a longer period, have strong cash flow needs (business owner), or plan to sell before the IO period ends. Many Marin buyers combine a jumbo ARM with interest-only — start at 6.5% IO for 10 years, plan to refinance when rates drop.
Considering a buydown in Marin County or the Bay Area? Call DiVita Home Finance at (800) 239-1108 or schedule a free consultation — we’ll run the numbers for your specific scenario.
