Feeling squeezed by today’s mortgage rates but still ready to buy in Snohomish County? You are not alone. Many local buyers want a lower payment without stalling their plans. The two most common tools are a 2-1 temporary buydown and a permanent buydown, and each can be smart in the right situation. In this guide, you will learn how both options work, what they cost, and how to compare quotes with Snohomish lenders so you can choose with confidence. Let’s dive in.
2-1 buydown basics
A 2-1 buydown is a temporary rate reduction funded upfront that lowers your interest by 2 percentage points in year one and 1 percentage point in year two. Starting in year three, your loan returns to the original note rate for the rest of the term. The prepaid subsidy sits in a lender-held escrow account and covers the difference between the reduced payment and the full note-rate payment for the first 24 months.
Who pays for it can vary. In our market, sellers or builders sometimes fund it as an incentive, especially when buyers are rate sensitive. You can also pay for it yourself or use lender credits when program rules allow.
The main goal is short-term payment relief. This can help you ease into ownership, bridge until income rises, or carry you until a planned refinance.
Permanent buydown basics
A permanent buydown uses discount points paid at closing to reduce your interest rate for the entire loan term. Lenders publish pricing tables that show how many points correspond to a specific rate reduction. Costs and results vary by lender and the market on the day you lock.
Buyers most often fund permanent buydowns themselves, but seller or lender credits can help when allowed by the loan program. The main goal is long-term payment reduction. If you plan to stay long enough to recoup the upfront cost, a permanent buydown can save more total interest and deliver a lower monthly payment for years.
How lenders qualify your loan
Most lenders qualify you at the note rate, not the temporary 2-1 rate. That means your debt-to-income ratio usually uses the full note-rate payment for underwriting, even if your first two years of payments are lower. Always ask how your lender will qualify your loan and whether temporary relief will be considered for DTI.
A permanent buydown lowers the note rate itself, so the qualifying payment can be lower. This can help you qualify or increase your borrowing power.
Loan programs such as Conventional, FHA, VA, and USDA also set limits on seller concessions and lender credits. Some programs require specific documentation for rate subsidies. Confirm all rules with your lender and make sure the buydown is shown clearly on your Loan Estimate and Closing Disclosure.
Cost comparison at a glance
Below is a simple, hypothetical illustration to show how the math works. Your numbers will differ based on your loan amount, quoted rates, and lender pricing.
Example assumptions:
- Loan amount: $480,000
- Term: 30 years
- Note rate without any buydown: 6.50%
- Compare a 2-1 buydown vs a permanent buydown to 6.00%
Monthly principal and interest:
- At 6.50%: about $3,035
- At 4.50% for year one (note minus 2%): about $2,432
- At 5.50% for year two (note minus 1%): about $2,725
- At 6.00% permanently: about $2,880
Savings:
- 2-1 buydown savings vs the note rate
- Year one: $603 per month, about $7,236 total
- Year two: $310 per month, about $3,720 total
- Total first two years: about $10,956, which approximates the subsidy required
- Permanent buydown savings vs the note rate
- Ongoing: $155 per month
Break-even idea:
- If a permanent buydown costs $4,800, the break-even is about 31 months since $4,800 divided by $155 is roughly 31. After that point, the permanent buydown pulls ahead versus paying no points.
- If you, as the buyer, had to pay the full 2-1 subsidy of about $10,956, it would be a larger upfront cost than the permanent example above. The 2-1 shines when a seller or builder funds most or all of it, or when you value large early payment relief and expect to refinance or sell before long.
Which one fits your plan?
Your time horizon is the key driver:
- Short stays under 2 to 3 years. A 2-1 can be compelling, especially with a seller-funded subsidy. It delivers the most payment relief when you need it early.
- Medium stays of 2 to 5 years. Compare the permanent buydown break-even to your expected hold period. If you expect to stay past break-even, a permanent buydown can be the better choice.
- Long stays over 5 years. Permanent buydown usually creates more total interest savings and more predictable payments.
Your situation also matters:
- If first-year cash flow is tight but likely to improve, the 2-1 can help you transition from renting to owning while you ramp up income.
- If you need a lower qualifying payment or you want long-term budget certainty, a permanent buydown can support both goals.
- If you plan to refinance soon, think carefully before buying permanent points you may not recoup.
Snohomish market dynamics to watch
In the Seattle–Bellevue–Everett metro, seller concessions ebb and flow with inventory and competition. When listings move fast and multiple offers are common, sellers are less likely to cover a buydown. When the market leans toward buyers, sellers and builders are more open to paying a 2-1 subsidy or offering credits.
When you write an offer, run the numbers on both a price reduction and a buydown subsidy. Some sellers prefer the optics and tax treatment of funding a buydown over cutting price. Your agent and lender can present side-by-side figures that show the impact on your monthly payment and the seller’s net.
How to compare quotes in Snohomish
You will make a better decision when you gather written quotes and ask the same questions with each lender.
Request side-by-side quotes
Ask for three written sets of numbers so you can compare apples to apples:
- No buydown
- 2-1 buydown, showing the exact subsidy amount
- Permanent buydown, showing points and the resulting rate
Ask these lender questions
- Will you qualify me at the note rate or the temporary 2-1 rate for DTI?
- What is the exact dollar cost to fund a 2-1 buydown on my loan amount?
- What permanent buydown options are available and how much do they cost in points or dollars?
- Are there any seller-concession or program limits that affect who can pay for the buydown?
- How will the buydown appear on my Loan Estimate and Closing Disclosure?
- If I plan to refinance in the next 12 to 24 months, which option makes more financial sense after closing costs?
Watch program limits and documentation
Each loan program has its own rules for seller concessions and interest-rate subsidies. Confirm with your lender whether a seller-funded 2-1 fits within program caps and how funds will be documented and held in escrow. Make sure you receive a clear explanation in writing.
Quick DIY calculator
Use this simple approach to get a feel for the numbers before you call lenders. Then confirm with official quotes.
Inputs to collect:
- Loan amount
- Note rate and desired permanent rate
- Term in years
Steps:
- Compute your monthly payment at the note rate. This is your baseline.
- For a 2-1, compute year-one payment at note rate minus 2% and year-two payment at note rate minus 1%.
- Subtract each from the note-rate payment to find monthly savings in year one and year two, then multiply by 12. Add both years to estimate the total subsidy.
- For a permanent buydown, ask for the upfront cost and the new rate. Compute monthly savings versus the note rate. Divide the upfront cost by the monthly savings to find break-even months.
Tip: Lenders use precise present-value math to price a 2-1 subsidy. Your estimate will be close enough to compare options, then your lender will finalize exact figures.
Putting it all together
If you expect to stay put for years, a permanent buydown often delivers more value after the break-even point, and it can help you qualify today. If you want breathing room in the first 24 months, a 2-1 buydown can be a smart way to ease into payments, especially if the seller funds it.
In Snohomish County, the best option often comes down to your hold period, cash flow, and the negotiation levers available on a specific property. Ask for written, side-by-side quotes and compare total costs, monthly payments, and break-even timing.
Ready to run the numbers on homes in Snohomish and the Eastside, and to negotiate the structure that fits your budget? Connect with a local advisor who can model both options and present a compelling offer.
If you want a clear path forward and a calm, data-driven approach, reach out to Wanis Nadir to compare scenarios, align the financing with your goals, and craft a winning strategy in today’s market.
FAQs
What is a 2-1 buydown on a Snohomish home purchase?
- A temporary subsidy that lowers your rate by 2% in year one and 1% in year two, with payments returning to the note rate starting in year three.
How does a permanent buydown help Snohomish buyers qualify?
- It reduces the note rate itself, so lenders often use the lower rate for DTI, which can help you qualify or borrow more.
Who can pay for a 2-1 or permanent buydown in Washington?
- Buyer, seller or builder, and sometimes lender credits, subject to loan program and seller-concession limits.
When is a 2-1 better than permanent points in this market?
- When you need early payment relief, expect to move or refinance within a couple of years, or can negotiate a seller-funded subsidy.
How do I decide between buydown options for a Snohomish home?
- Compare written quotes for no buydown, a 2-1, and a permanent buydown, then weigh upfront cost, monthly savings, break-even months, and your expected hold period.
