Temporary buydown calculator
A seller-paid buydown drops your rate for the first years of the loan. See the payment, the savings, and the concession it takes to fund it.
Payment breakdown
Buyer savings & seller concession
Total monthly payment
Cumulative savings
Estimates only. Figures are illustrative, are not a loan offer, a commitment to lend, or an advertisement of credit terms. Taxes, insurance, mortgage insurance and HOA dues are entered as estimates and your real numbers will differ. A temporary buydown has to be written into the purchase contract and funded at closing by the seller or builder.
How a temporary buydown works
In plain English: someone else — usually the seller or the builder — pays money up front so your monthly payment starts low and steps up to the real payment over your first few years in the house.
Your loan has one permanent interest rate, called the note rate. A temporary buydown never changes it. What it changes is how much you actually hand over each month at the beginning.
At closing, the seller puts a lump sum into a separate account tied to your loan. Each month during the buydown, that account quietly pays the difference between your lower payment and the full note-rate payment. When the account runs out, you simply pay the note-rate payment — the one you were approved for all along.
Nothing here is adjustable and nothing depends on the market. You know today, to the dollar, what you will pay in year one, in year two, and every year after.
The words you'll hear
- Seller concession: Money the seller agrees, in the contract, to put toward your costs. It comes out of what they walk away with at closing — not out of your pocket. When homes are sitting on the market, plenty of sellers would rather give a concession than drop their asking price.
- Note rate: The permanent rate printed on your loan documents. It is also the rate the lender uses to approve you, so you are never approved on the strength of the temporary lower payment.
- Buydown account: The pot of money the concession pays for. It sits with your loan servicer and covers part of your payment every month until it is used up. You never touch it yourself.
- 2-1, 3-2-1, 1-0: Shorthand for how far below the note rate your payment starts, and how it climbs back. A 2-1 starts 2% lower, then 1% lower, then full rate from year three.
The common schedules
- 2-1 buydown: The rate is 2% lower in year 1 and 1% lower in year 2, then the full note rate from year 3 onward. The most common one.
- 3-2-1 buydown: The rate is 3% lower in year 1, 2% lower in year 2 and 1% lower in year 3, then the full rate. The biggest early relief, and the biggest concession to negotiate.
- 1-1-1 buydown: The rate is 1% lower in each of years 1, 2 and 3, then the full note rate from year 4 onward. A gentler, longer cushion.
- 1-0 buydown: The rate is 1% lower in year 1 only, then the full note rate from year 2 onward. The cheapest for a seller to fund.
Why this helps a first-time buyer
The first couple of years of owning a home are the most expensive and the least predictable ones. A buydown puts your cheapest payments exactly where that pressure lands.
- Breathing room when you need it most. Year one is when the furniture, the water heater that dies in month three, the higher utility bill and the first repairs all arrive at once. A smaller payment gives that money somewhere to come from.
- It matches an income that's going up. If you're early in your career, finishing school or a residency, expecting a raise, or waiting on a spouse to go back to work, your payment steps up on roughly the same curve your paycheck does.
- It eases you into ownership instead of dropping you in. Going from rent to a mortgage, taxes, insurance and upkeep is a real jump. This gives you a year or two to build the habit — and the savings buffer — at a gentler number.
- No surprises: the whole schedule is in writing. Unlike an adjustable-rate loan, nothing here moves with the market. You can see every year's payment before you sign anything.
- You're approved at the full payment, not the starter payment. The lender qualifies you at the note rate, so the final number is one you already showed you can carry. The buydown is a cushion, not a stretch.
- It's the seller's money, not yours. When the seller or builder funds it, the buydown costs you nothing out of pocket — it's negotiated into the contract like any other term.
- The same money goes further early. Taken as a price cut, the seller's contribution trims your payment by a few dollars a month spread over 30 years. Put into a buydown, it lands in the first years instead — where a new owner actually feels it.
- It doesn't go to waste if rates fall. If you refinance or sell before the buydown runs out, the unused portion is generally credited toward your loan rather than lost. Ask me about the exact terms on your program.
Things to keep in mind
- It is temporary. The payment goes up on schedule. Budget around the final number, not the year-one number — that's why the table above shows both.
- The seller has to agree to it. A buydown only exists if the concession is written into the purchase contract, so raise it with your agent when you make the offer, not after.
- Every loan program caps concessions. How much a seller is allowed to contribute depends on the program, your down payment and whether you'll live in the home. I'll tell you your ceiling before you write the offer.
- A buydown is not a rate lock. It is built on top of whatever note rate you end up with, so locking your rate is still a separate decision.
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