A 2-1 buydown is money paid at closing, usually by the seller, that lowers the buyer's mortgage payment for two years: as if the rate were 2 points lower in year one and 1 point lower in year two, before the full rate applies from year three. With Freddie Mac's 30-year average at 7.03% on September 24, 2026, up from 6.95% a week earlier, it is back in metro Detroit offers. On the August median Oakland County house, $395,000 with 5% down, a 2-1 buydown costs the seller about $8,758 and cuts the buyer's first-year payment by $483 a month. The same $8,758 off the price saves about $56 a month. Which is better depends on the buyer, and on two rules most explainers leave out: the cap on what a seller may contribute, and the fact that the buyer still qualifies at the full rate.
In short
- 7.03%: Freddie Mac's 30-year fixed average on September 24, 2026; 6.30% a year earlier (Freddie Mac, 2026).
- About 2.2% of the price: the cost of a 2-1 buydown at that rate, by our arithmetic below.
- 3%: Fannie Mae's cap on seller contributions, buydown included, when the buyer puts down less than 10% (Fannie Mae, 2025).
- 44.7% of U.S. home sales in August 2026 included a seller concession, the highest August share since at least 2020 (Redfin, 2026).
Why buydowns are back in metro Detroit
The market moved this summer. Realcomp's August 2026 report shows 29,374 single-family homes on the market across its MLS, up 16.3% on a year earlier, pending sales down 9.8% and closed sales down 6%. Homes still sold at 98.7% of their last asking price, and the MLS median rose 4.5% year on year to $300,000, but Realcomp's chief executive Karen Kage said the month brought "a slight decrease in median sales prices while the inventory uptick continued."
Nationally, Redfin counted concessions in 44.7% of August sales, up from 42.6% a year earlier, covering repairs, closing costs and rate buydowns. Redfin's sample does not include Detroit, so there is no Michigan figure, but a buyer's agent in Oakland or Livingston County will recognise the trend. When rates rise and listings stay longer, the seller's money goes toward the payment rather than the price.
What a 2-1 buydown costs, on Michigan medians
The cost is the payment difference the escrow account covers: twelve months at 2 points below the note rate, then twelve at 1 point below. We assumed a 30-year fixed loan at the Freddie Mac average of 7.03% and 5% down. That is an assumption for the arithmetic, not a quoted rate; Freddie Mac's survey assumes 20% down and excellent credit, and real note rates vary.
| Median, August 2026 | Loan, 5% down | Payment at 7.03% | Year 1 saving | Year 2 saving | Buydown cost |
|---|---|---|---|---|---|
| Wayne County, $230,000 | $218,500 | $1,458 | $281 | $144 | $5,100 |
| Realcomp MLS, $300,000 | $285,000 | $1,902 | $367 | $188 | $6,652 |
| Oakland County, $395,000 | $375,250 | $2,504 | $483 | $247 | $8,758 |
Principal and interest only; taxes and insurance excluded. At this rate the cost lands at about 2.2% of the purchase price in each case. That share falls as rates fall, which is why older pages quote cheaper buydowns.
The buydown versus the same money off the price
Take the Oakland example. $8,758 off the price lowers the loan by about $8,320 and the payment by about $56 a month, for thirty years. The buydown lowers it by $483 a month in year one and $247 in year two, then nothing.
That is the real choice. A buyer who is stretching in year one, expects a raise, or is carrying two housing costs during a move gets more from the buydown. A buyer who will keep the loan at full rate for a decade gets more from the lower price. The seller nets the same either way. And whichever the buyer picks, Michigan resets the taxable value after the sale; our uncapping calculator shows what the first full tax bill will be.
Four rules to check before you write it into an offer
- Check the contribution cap first. Fannie Mae counts a seller-paid buydown as an interested party contribution, together with closing cost credits: 3% of the lower of price or appraised value above 90% loan-to-value, 6% from 75.01% to 90%, 9% at 75% or below, and 2% on an investment property. At 5% down the 2.2% buydown leaves about 0.8% for everything else. FHA's handbook allows 6% of the sales price, buydowns included. VA counts seller-paid buydowns as concessions capped at 4%.
- Confirm the loan allows it. Fannie Mae allows temporary buydowns on fixed-rate loans for principal residences and second homes, not investment properties or cash-out refinances. FHA's handbook bars them on refinances and on adjustable-rate mortgages.
- Tell the buyer how they qualify. Fannie Mae requires the lender to "qualify the borrower based on the note rate without consideration of the bought-down rate." VA qualifies on the full payment after the buydown ends. A 2-1 buydown lowers the first two years of payments. It does not, as a rule, let the buyer borrow more.
- Say where the money goes. Fannie Mae requires the funds in a custodial account, fully funded before the loan is delivered, and not refundable unless the loan is paid off before they are used. A buyer who refinances in year one should ask the lender what happens to the balance.
The mistake most agents make at step 1
They write a 2-1 buydown and a separate closing-cost credit into the same offer without adding them up. On a low-down-payment conventional loan the two together can pass 3%, and the excess has to come out of the deal before closing, usually late and under pressure. Add every seller dollar into one number before the offer goes in, and ask the lender to confirm it fits the loan program.
Where this sits in a listing agent's week
None of this needs a new product. It needs the rate, the loan type and the seller's net in one place on the afternoon an offer arrives, and a deadline tracker that knows the appraisal and financing dates that follow. That deadline and document side of a transaction is part of the real estate operations work we build. We do not set rates, structure loans or advise on financing; the lender decides what the loan allows. For what higher rates do to a Michigan payment at purchase, see the Michigan mortgage payment at today's rates, and for the county figures behind the medians above, our Michigan real estate market report.
At 7%, two years of relief costs about 2.2% of the price. Count it against the cap before you offer it.
