Buydown Calculator
Buying a home is exciting — but high interest rates can make monthly payments feel overwhelming. A temporary buydown offers a smart solution by reducing your mortgage payment for the first few years of your loan.
Use our Buydown Calculator to see how much you could save with options like a 3-2-1 buydown, 2-1 buydown, 1-1 buydown, or 1-0 buydown. Unlike most calculators, ours pulls live mortgage rates and shows a full breakdown of payments, monthly savings, and total seller concessions needed for each option.
Want to make an informed decision? Start by running your numbers below!
How Our Buydown Calculator Works
Our calculator is designed to give you a clear view of the potential savings a temporary buydown could offer. It automatically builds four different buydown scenarios:
3-2-1 Buydown: 3% lower rate in Year 1, 2% lower in Year 2, 1% lower in Year 3, then normal rate
2-1 Buydown: 2% lower rate in Year 1, 1% lower in Year 2, then normal rate
1-1 Buydown: 1% lower rate in Years 1 and 2, then normal rate
1-0 Buydown: 1% lower rate in Year 1, then normal rate
Each option shows:
Your adjusted interest rate each year
Monthly payment at that rate
Monthly savings compared to the full rate
Annual savings during the reduced-rate period
Total seller concession needed to fund the buydown
We also pull live Optimal Blue (OBMMI) mortgage rates, so your estimates are based on today’s real market conditions, not outdated averages.
Why Temporary Buydowns Matter
Temporary buydowns can be a powerful negotiating tool between buyers and sellers. Rather than lowering the purchase price, sellers may offer a credit to fund a buydown, making the monthly payment more manageable for you — especially during the early years of homeownership.
For example:
If market rates are 7%, a 3-2-1 buydown could reduce your first-year payment to the equivalent of a 4% rate.
Over the first three years, you could save thousands in interest and payment reductions.
By the time the full rate kicks in, you may have opportunities to refinance if rates drop.
Important Considerations
Not all loans qualify for buydowns. Typically, Conventional, FHA, and VA loans allow temporary buydowns, but rules vary by lender.
Seller concessions are required. A buydown isn’t free — the seller usually funds it as part of your closing costs.
Long-term budgeting still matters. After the reduced-rate period ends, you’ll need to afford the full note rate.
Refinancing is an option. If interest rates fall within a few years, you might refinance before the full rate applies.
Frequently Asked Questions (FAQ)
What is a temporary buydown?
A temporary buydown is a mortgage financing arrangement where the interest rate — and therefore the monthly payment — is reduced for the first few years of the loan.
How is a buydown different from a permanent rate buydown?
A temporary buydown lowers your payment for only the first 1–3 years, while a permanent buydown (using discount points) lowers your rate for the life of the loan.
Who typically pays for the buydown?
Usually, the seller, builder, or lender funds the buydown as a way to make the home more affordable without reducing the listing price.
Can I combine a temporary buydown with other closing cost assistance?
In many cases, yes — depending on loan type and lender policies. However, total concessions usually can’t exceed specific limits based on your loan type and down payment.
What happens if I refinance before the buydown period ends?
If you refinance before the buydown period is over, any unused seller-paid funds set aside for the buydown typically get applied toward your principal payoff at closing.
Final Thoughts
Temporary buydowns offer a unique opportunity to ease into your mortgage payments — but understanding the full impact is crucial. Use our Buydown Calculator to see all your options side-by-side and make the best decision for your financial future.
