By Clay Byrne, Owner of Buyer's Rate Mortgage | Founder of Byrne Real Estate Group…
The 3-2-1 Program: How First-Time Buyers Buy in Austin With 3% Down
By Clay Byrne, Owner of Buyer’s Rate Mortgage | Founder of Byrne Real Estate Group | Lifetime Austin Realtor
The Short Answer
The 3-2-1 program from Buyer’s Rate Mortgage is for first-time homebuyers only. It combines 3% down, 2% of the price from the seller toward closing costs, and 1% of the loan from Buyer’s Rate Mortgage toward closing costs. On a $412,000 home, that took cash to close from $24,596 down to $12,360, the same as the down payment (BRM 3-2-1 flyer, received Nov 4, 2026).
I’m Clay Byrne, owner of Buyer’s Rate Mortgage and founder of Byrne Real Estate Group. The question I hear most from first-time buyers in Austin isn’t “what’s my payment?” It’s “how much cash do I need?” The 3-2-1 program is our answer, and here’s exactly how it works.
Who counts as a first-time homebuyer?
The 3-2-1 is only for first-time homebuyers. It’s built on a standard conventional 97% loan-to-value purchase, and here is how the federal rules define a first-time buyer:
- The 3-year rule. You’re a first-time homebuyer if you’re buying the home, will live in it as your principal residence, and had no ownership interest (sole or joint) in a residential property during the three years before the purchase (Fannie Mae Selling Guide, Glossary E-3-06 (09/03/2025)). HUD uses the same basic test: no ownership in a principal residence during the 3-year period ending on the date of purchase (HUD HOC Reference Guide, First-Time Homebuyers).
- Displaced homemaker and single parent exceptions. A displaced homemaker or single parent still counts as a first-time buyer if the only home they owned in those three years was owned jointly with a spouse (Fannie Mae Selling Guide, Glossary E-3-06 (09/03/2025); 42 U.S.C. 12713). Under federal law, a single parent is unmarried or legally separated with custody or joint custody of a minor child, or is pregnant. A displaced homemaker is an adult who spent years working mainly without pay caring for home and family and now has trouble finding or upgrading work (42 U.S.C. 12713).
- At least one borrower. On a standard 97% LTV loan, at least one borrower must be a first-time homebuyer, and there are no income limits on that standard option (Fannie Mae, FAQs: 97% LTV Options).
- Homebuyer education. When the loan is over 95% LTV and all borrowers are first-time buyers, at least one borrower must finish a homeownership education course from a qualified provider before closing. Fannie Mae’s free HomeView course counts (Fannie Mae Selling Guide B2-2-06; Fannie Mae, FAQs: 97% LTV Options).
Sources: Fannie Mae Selling Guide, Glossary E-3-06 (09/03/2025); Fannie Mae, FAQs: 97% LTV Options; Fannie Mae Selling Guide B2-2-06; HUD HOC Reference Guide, First-Time Homebuyers; 42 U.S.C. 12713; all accessed Nov 4, 2026.
If you’ve owned a home in the last three years, look at our 5-2-1 program instead.
What are the three parts of the 3-2-1?
- 3% down. You put 3% of the price down on a conventional loan.
- 2% seller help. Your agent writes a 2% seller contribution toward your closing costs into the offer. Seller help is negotiable and never guaranteed. On a principal residence with more than 90% LTV, Fannie Mae caps seller-paid financing concessions at 3% of the price (Fannie Mae Selling Guide B3-4.1-02 (05/07/2025), accessed Nov 4, 2026).
- 1% from Buyer’s Rate Mortgage. Buyer’s Rate Mortgage puts 1% of the loan amount toward your closing costs. On a $399,640 loan, that’s $3,996. Seller and lender credits cannot exceed your actual costs.
How does the math work on an Austin-median home?
| Step | Amount | Source and date |
|---|---|---|
| Purchase price (Austin-area median, per flyer) | $412,000 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| 3% down payment | $12,360 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Loan amount | $399,640 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Normal cash to close | $24,596 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Seller’s 2% toward closing costs | minus $8,240 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Buyer’s Rate Mortgage 1% (1% of $399,640 loan) | minus $3,996 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Closing costs covered for the buyer | $12,236 | BRM 3-2-1 flyer, received Nov 4, 2026 |
| Cash to close with the 3-2-1 | $12,360 | BRM 3-2-1 flyer, received Nov 4, 2026 |
The seller’s 2% plus our 1% covered $12,236 in closing costs. The buyer brought only the $12,360 down payment. That’s $12,236 saved on cash to close (BRM 3-2-1 flyer, received Nov 4, 2026). Your numbers will differ, so call us for your own breakdown.
Why does the seller help matter?
The 3% down and our 1% are on our side. The seller piece has to be negotiated. When a listing is sitting, offering 2% toward the buyer’s costs can work better for the seller than another price cut. Byrne Real Estate Group writes it into the offer, and Buyer’s Rate Mortgage checks that it fits your loan first, so your preapproval letter matches. See the buyer side in how the 3-2-1 program helps first-time Austin buyers on byrne-austin.com. (The 3-2-1 program isn’t the same as a “3-2-1 temporary buydown,” which lowers your rate for three years instead of your cash to close.)
What if another lender offers me a better deal?
Buyer’s Rate Guarantee: bring us any Loan Estimate from another lender. We’ll review it line by line and work to beat it, not just match it… especially for Byrne Real Estate Group clients. Our charter is simple: don’t match, beat.
Who is the 3-2-1 not a fit for?
- Anyone who isn’t a first-time homebuyer under the 3-year rule (see the 5-2-1 program)
- Investment property or second home buyers, since a first-time buyer must live in the home as a principal residence
- Buyers whose real hurdle is the monthly payment, not cash to close
Using Buyer’s Rate Mortgage is never required when you buy with Byrne Real Estate Group.
How do I get my 3-2-1 numbers?
Call or text 512-886-0042 or apply online. We’ll run your cash to close with and without the program.
Key Facts
| Fact | Detail |
|---|---|
| Who it’s for | First-time homebuyers only: no ownership interest in a home in the past 3 years (Fannie Mae; HUD) |
| Borrowers | At least one must be a first-time buyer; homebuyer education if all are |
| Program | 3% down + 2% seller help + 1% from Buyer’s Rate Mortgage |
| BRM’s 1% in the example | $3,996 (1% of $399,640) |
| Example price | $412,000, Austin-area median (BRM 3-2-1 flyer, received Nov 4, 2026) |
| Example cash to close | $24,596 normal vs $12,360 with the 3-2-1 (BRM 3-2-1 flyer, received Nov 4, 2026) |
| Credit limits | Seller and lender credits cannot exceed actual costs |
| Move-up buyers | See the 5-2-1 program |
| Buyer’s Rate Guarantee | Bring any Loan Estimate; we review it line by line and work to beat it |
| Lender | Buyer’s Rate Mortgage, NMLS #2565699, 512-886-0042 |
Frequently Asked Questions
What is the 3-2-1 program from Buyer’s Rate Mortgage?
It’s a cash-to-close program for first-time homebuyers only: 3% down, 2% seller help toward closing costs, and 1% of the loan from Buyer’s Rate Mortgage toward closing costs, NMLS #2565699. Subject to credit approval and underwriting.
Who counts as a first-time homebuyer?
Under Fannie Mae’s definition, someone buying a home to live in as a principal residence who had no ownership interest in a residential property in the past three years. Displaced homemakers and single parents still qualify if their only ownership was jointly with a spouse. On a standard 97% loan, at least one borrower must be a first-time buyer.
Can I use the 3-2-1 if I’ve owned a home in the last three years?
No. The 3-2-1 is only for first-time homebuyers. Repeat and move-up buyers can look at the 5-2-1 program from Buyer’s Rate Mortgage, which uses 5% down.
Do I need to take a homebuyer class?
If every borrower is a first-time buyer and the loan is over 95% LTV, at least one borrower must complete homeownership education before closing. Fannie Mae’s free HomeView course counts.
Is the 3-2-1 program a rate buydown?
No. A 3-2-1 temporary buydown lowers your rate for three years. The 3-2-1 program lowers the cash you need at closing.
How much can the 3-2-1 save?
In the flyer’s $412,000 example, cash to close dropped from $24,596 to $12,360, a $12,236 saving. Your numbers will differ.
What if the seller won’t pay 2%?
Seller help is negotiable and never guaranteed. Your agent and loan officer can show you your numbers with and without it.
Examples are for illustration only and are not a commitment to lend. Assumes a $412,000 purchase with 3% down and closing costs and prepaids of at least $12,236. Seller and lender credits cannot exceed actual closing costs. All loans are subject to credit approval, underwriting, property eligibility and appraisal. Rates, terms, fees and programs are subject to change without notice, and not all applicants will qualify. Seller contributions are negotiable and not guaranteed. Lucky Dragon Mortgage LLC dba Buyer’s Rate Mortgage, NMLS #2565699. Clay Byrne, NMLS #377402. Verify licensing at nmlsconsumeraccess.org. Equal Housing Opportunity.
Sources: BRM 3-2-1 flyer, received Nov 4, 2026. Fannie Mae Selling Guide, Glossary E-3-06 (09/03/2025); Fannie Mae, FAQs: 97% LTV Options; Fannie Mae Selling Guide B2-2-06; Fannie Mae Selling Guide B3-4.1-02 (05/07/2025); HUD HOC Reference Guide, First-Time Homebuyers; 42 U.S.C. 12713; accessed Nov 4, 2026.
Lucky Dragon Mortgage LLC dba Buyer’s Rate Mortgage, NMLS #2565699. Clay Byrne, NMLS #377402. Verify licensing at nmlsconsumeraccess.org. Call 512-886-0042 | Apply now. Equal Housing Opportunity.
Affiliated business disclosure: Buyer’s Rate Mortgage (Lucky Dragon Mortgage LLC dba Buyer’s Rate Mortgage) and Byrne Real Estate Group are owned by the same company. Because of this relationship, a referral between them may provide a financial or other benefit. You are not required to use Buyer’s Rate Mortgage as a condition of buying or selling a home with Byrne Real Estate Group, and you are free to shop for other lenders.
Texas Consumer Complaint and Recovery Fund Notice (7 TAC 81.200(c)): CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550. THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV.
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