Temporary buydown calculator
See your payment each year with a 2-1, 3-2-1, 1-0 or 1-1 buydown, and what the buydown costs up front.
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Estimate only, not a quote or a commitment to lend. Payments are principal and interest. The buydown cost is the total of the monthly savings, paid up front at closing, often by the seller or builder as a negotiated concession, and seller concession limits apply by loan type. You generally qualify at the full note rate. Not every program allows a temporary buydown.
A temporary buydown lowers your mortgage rate for the first one to three years, then the rate returns to the full note rate for the rest of the loan. On a 2-1 buydown, the rate is 2% lower in year one and 1% lower in year two. The cost equals the total monthly savings, paid up front at closing, often by the seller or builder.
How a temporary buydown works
With a 2-1 buydown, your rate is 2% below the note rate in year one and 1% below in year two. From year three on, you pay the full note rate for the rest of the loan. A 3-2-1 adds a third year, and a 1-0 covers just the first year.
The discount isn't free. The difference between the full payment and the reduced payment, added up over the buydown years, is paid up front at closing and held in an account that tops up your payment each month. That's the total buydown cost the calculator shows.
When it makes sense
- The seller or builder is offering concessions. Putting them toward a buydown can lower your payment while you settle in.
- You expect your income to grow over the next couple of years and want breathing room now.
- You want a lower payment without a permanent point cost. Compare it side by side with permanently buying down the rate.
Common questions
What is a 2-1 buydown?
A 2-1 buydown lowers your interest rate by 2% in the first year and 1% in the second year. From year three, you pay the full note rate. The savings are funded up front at closing.
Who pays for a temporary buydown?
Often the seller or the builder, as a concession negotiated in the purchase contract. You can also pay for it yourself. Each loan type limits how much the seller can contribute.
Do I qualify at the lower rate?
Generally no. Lenders usually qualify you at the full note rate, so you need to afford the payment you'll have once the buydown ends.
What happens if I refinance or sell during the buydown?
Depending on the lender and program, unused buydown funds are usually applied to your loan balance or credited to you. Ask your advisor how your lender handles it.
Is a temporary buydown better than buying points?
It depends on how long you'll keep the loan. A temporary buydown lowers the payment for the first few years. Points lower the rate for the whole loan. Your advisor can price both.