Mortgage Calculators
Buydown Calculator
A temporary buydown lowers your rate for the first years of the loan. A lump sum — usually paid by the seller, builder or lender — is held in escrow and covers part of your interest. After the buydown period, the payment returns to the note rate.
Dennis Hughes, MLO
(209) 602-4900
Dennis@lend4less.com
NMLS #178729
Temporary Buydown Type
Loan details
Year-by-year schedule
| Year | Effective rate | Payment (P&I) | Monthly savings | Annual subsidy |
|---|---|---|---|---|
| Year 1 | 4.500% | $2,026.74 | $501.53 | $6,018.37 |
| Year 2 | 5.500% | $2,271.16 | $257.12 | $3,085.39 |
| After buydown | 6.500% | $2,528.27 | — | — |
How temporary buydowns work
- 3-2-1: rate reduced 3% in year 1, 2% in year 2, 1% in year 3.
- 2-1: rate reduced 2% in year 1 and 1% in year 2.
- 1-1: rate reduced 1% in years 1 and 2.
- 1-0: rate reduced 1% in year 1 only.
- You still qualify at the full note rate. If you refinance or sell early, unused buydown funds are credited back to the loan.
Year 1 Payment
$2,026.74
Versus $2,528.27 at the 6.5% note rate.
Buydown summary
Total escrow cost$9,103.76
Note rate payment$2,528.27
Year 1 savings$501.53
Buydown period2 years
Estimates only. Your credit score, property type, occupancy, loan purpose and down payment drive your actual rate and payment. A calculator will never be as accurate as a conversation with an experienced loan professional.