See how a temporary mortgage buydown works and calculate potential payments with a 3-2-1, 2-1 or 1-year buydown. Compare payments, savings and buydown costs.
Mortgage buydown calculator
A temporary buydown can lower your mortgage payment during the first one, two, or three years of your loan — giving you time to ease into your full monthly payment.
See how 3-2-1, 2-1, and 1-year buydowns work, then use our calculator to compare the numbers.
A temporary mortgage buydown is a financing arrangement that temporarily reduces the portion of the mortgage payment paid by the borrower during the first one or more years of the loan.
The mortgage itself still has its normal note rate. A temporary interest rate buydown does not permanently change that rate. Instead, money is contributed to a buydown account at closing. Each month during the temporary period, money from that account helps make up the difference between the reduced payment you make and the full scheduled mortgage payment.
After the temporary buydown period ends, you begin making the full payment based on the mortgage's note rate.
A temporary buydown does not mean the actual mortgage rate changes every year. The mortgage note rate generally remains the same. The temporary buydown subsidizes a portion of the payment during the introductory period.
If the mortgage note rate were 6.50%, the payment the borrower makes would be calculated from the rates below. The note rate itself would still be 6.50%.
Availability of each buydown structure depends on the mortgage program, property, transaction, and applicable underwriting guidelines.
Depending on the mortgage program and the transaction, a temporary buydown may potentially be funded by a permitted source. Seller, builder, and other interested-party contributions are subject to that program's contribution limits. Not every source is permitted for every mortgage.
The best choice depends on the individual transaction, including the purchase contract, the loan program, and how the contribution limits apply.
Instead of a seller simply reducing the sales price, a buyer and seller may decide that using some negotiated seller concessions toward a temporary buydown provides the buyer with greater short-term payment relief.
A temporary vs permanent buydown comparison comes down to how long the lower payment lasts and whether the note rate itself changes. Neither option is labeled better here.
Temporary buydown
Permanent buydown
These are possible reasons buyers look at a temporary buydown. They are not a promise of savings or a guaranteed financial benefit.
A refinance should never be required for the strategy to make sense.
Enter your own numbers. The comparison updates as you change them. Rates are not shown below zero. Dollars include cents, and rates show up to three decimals when needed.
The note rate stays the same. A calculated buydown rate will not go below 0%.
Mortgage insurance is not calculated on this page. If your loan will have mortgage insurance, the housing payment will be higher than the estimate shown here.
Full note-rate principal and interest
per month at for years
Total subsidy for this structure: · Loan Percentage:
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Ryan Minick and Steve DeLon can walk through whether a temporary buydown fits the loan, the property, and the way the purchase is structured.
Temporary Mortgage Buydown Comparison
The 2 Mortgage Guys
Mortgage insurance is not included. Taxes, insurance, and HOA dues are not reduced by the buydown.
Total subsidy: . Loan Percentage: . Total payment reduction versus the full note-rate payment: .
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