Temporary buydown calculator
Lower payments in the first years.
A temporary buydown lowers your interest rate for the first one to three years of the loan. Someone, often the seller or builder, pays the difference up front. Compare the options and what each one costs.
2% lower in year 1 and 1% lower in year 2.
2-1 Buydown cost
$9,104
The total of the monthly savings, paid up front at closing. That's about 2.28% of the loan amount.
| Year | Rate | Monthly P&I | You save |
|---|---|---|---|
| Year 1 | 4.5% | $2,026.74 | $501.53/mo |
| Year 2 | 5.5% | $2,271.16 | $257.11/mo |
| Year 3+ | 6.5% | $2,528.27 | Full payment |
Compare buydowns
Monthly principal and interest in each year. Choose a buydown to see it above.
| Buydown | Year 1 | Year 2 | Year 3 | After | Cost |
|---|---|---|---|---|---|
| $1,7963.5% | $2,0274.5% | $2,2715.5% | $2,528 | $17,889 | |
| $2,0274.5% | $2,2715.5% | $2,528 | $2,528 | $9,104 | |
| $2,2715.5% | $2,2715.5% | $2,528 | $2,528 | $6,171 | |
| $2,2715.5% | $2,528 | $2,528 | $2,528 | $3,085 |
How it works
- The buydown cost is the difference between the full payment and the lower payment, added up for every month of the buydown.
- That amount is paid at closing, often by the seller or builder as a concession, and held in an account that covers the difference each month.
- After the buydown ends, your payment goes to the full note rate for the rest of the loan.
Estimates for illustration only, not a loan offer or commitment to lend.
Shows principal and interest only; taxes, insurance and mortgage insurance are not included. Buydown availability depends on the loan program, and who may pay for it (seller, builder or lender) is subject to program limits. You'll typically qualify at the full note rate, not the reduced rate. Not all borrowers will qualify.
Is a buydown right for you?
I'll compare a temporary buydown with permanent discount points and other options so you can see which saves you more.
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