Buydown calculatorLower payments in the early years.
Lower payments in the early years.
Clear costs for the seller.
A temporary buydown uses a seller credit to lower your payment for the first one to three years. Compare the 3-2-1, 2-1 and 1-0 side by side, and see exactly what each one costs.
A tip from Mike: buydowns are a great thing to ask for in a negotiation. Bring these numbers to your agent.Loan details
Standard monthly principal and interest$4,428.95 / month7.375% note rate · 30-year term · 95% loan-to-value
Compare buydown optionsSeller-funded subsidy estimates. Pick one to see the year-by-year detail.
3-2-1 buydown, year by yearTotal savings $29,925.78
Year 14.375% payment rate
Payment$3,201.67
You save$1,227.29 /mo
Over 12 payments$14,727.45
Year 25.375% payment rate
Payment$3,590.82
You save$838.14 /mo
Over 12 payments$10,057.67
Year 36.375% payment rate
Payment$4,000.57
You save$428.39 /mo
Over 12 payments$5,140.66
Year 4 onward7.375% note rate
$4,428.95 / month. The full note-rate payment begins.How a temporary buydown works
The seller prepays part of your interest, so your first years cost less.
3-2-1Your payment rate is 3 points lower in year one, 2 points lower in year two and 1 point lower in year three.
2-12 points lower in year one and 1 point lower in year two. A popular middle ground.
1-01 point lower for the first year. The lowest cost, and a little breathing room after closing.
Good to knowThe total cost equals what you save in principal and interest during the buydown years. Your note rate never changes, so you qualify and plan for the full payment.
Who pays for it?Usually the seller, as a credit at closing. Sometimes a builder. How much they can contribute depends on the loan program.
Do I qualify at the lower payment?Usually not. Most programs qualify you at the full note-rate payment, so the buydown is breathing room, not extra buying power.
What if I refinance or sell early?It depends on the program. Ask how any unused buydown funds are handled before you sign.
Is it better than a lower price?Sometimes. A price cut lowers the payment a little forever. A buydown lowers it a lot for a year or two. I’ll show you both side by side.
Estimates show principal and interest only. Taxes, insurance, mortgage insurance, HOA dues and other costs are excluded. A temporary buydown subsidizes payments; the loan’s note rate remains unchanged. Figures are calculated at full precision and displayed to the nearest cent. Eligibility and seller contribution limits depend on the loan program and lender. Not a commitment to lend.