Mortgage Buydown Calculator
Compare different buydown options and calculate your potential savings. Lower your initial mortgage payments with 2-1, 3-2-1, and temporary buydown programs.
Calculate Your Buydown Savings
Enter your loan details below to see how much you can save with different buydown options
Buydown Calculator
Buydown Cost
Calculator Disclaimer
This calculator provides estimates based on the information you enter and current market conditions. Actual buydown costs, savings, and eligibility may vary based on:
- Your credit score and history
- Loan program requirements
- Property type and location
- Current market rates
- Lender policies and fees
- Seller concessions available
Please consult with one of our mortgage experts for personalized buydown options and accurate terms based on your specific situation. The results shown are for informational purposes only and do not constitute a commitment to lend.
Understanding Mortgage Buydowns
A mortgage buydown is a financing technique where you pay extra points upfront to reduce your interest rate for the initial years of your mortgage. This can help make your monthly payments more affordable during the early years of homeownership.
Types of Buydowns
2-1 Buydown
Interest rate is reduced by 2% in year 1 and 1% in year 2, then returns to the note rate.
3-2-1 Buydown
Rate reduces by 3% first year, 2% second year, and 1% third year.
Benefits & Considerations
Benefits
- Lower initial monthly payments
- Easier qualification for homebuyers
- Time to adjust to homeownership costs
- Potential for future rate decreases
- Can be paid by seller or builder
Considerations
- Upfront cost of buying down the rate
- Payment increases after buydown period
- May not be best if planning to move soon
- Consider future income expectations
Benefits of Mortgage Buydowns
Discover how buydowns can make homeownership more affordable
Lower Initial Payments
Reduce your monthly mortgage payment during the first few years, making it easier to manage your budget as a new homeowner.
Easier Qualification
Lower initial payments can help you qualify for a larger loan amount or meet debt-to-income ratio requirements.
Seller Incentives
Many sellers and builders offer buydowns as incentives, paying the cost to make their properties more attractive to buyers.
Frequently Asked Questions
What is a mortgage buydown?
A mortgage buydown is a financing technique where you pay extra points upfront to reduce your interest rate for the initial years of your mortgage. This lowers your monthly payments during the early years of homeownership, making it easier to afford your new home.
What is a 2-1 buydown?
A 2-1 buydown reduces your interest rate by 2% in the first year and 1% in the second year, then returns to the note rate for the remainder of the loan. This is the most common temporary buydown program.
What is a 3-2-1 buydown?
A 3-2-1 buydown reduces your interest rate by 3% in the first year, 2% in the second year, and 1% in the third year, then returns to the note rate. This provides even more savings in the early years but costs more upfront.
How much does a buydown cost?
Buydown costs vary based on the loan amount, rate reduction, and lender policies. Typically, a 2-1 buydown costs 2-3% of the loan amount, while a 3-2-1 buydown costs 3-4% of the loan amount. The seller or builder may pay these costs as a concession.
Who pays for a mortgage buydown?
The buyer, seller, or builder can pay for a buydown. In many cases, sellers or builders offer buydowns as incentives to make homes more affordable. The cost is typically paid at closing as part of the loan origination.
Is a buydown worth it?
A buydown can be worth it if you need lower payments initially, expect your income to increase over time, or if the seller/builder is paying for it. Consider the upfront cost versus the monthly savings and how long you plan to stay in the home.
Can I refinance with a buydown?
Yes, you can refinance a mortgage with a buydown at any time. However, if you refinance during the buydown period, you'll lose the remaining buydown benefits. Consider waiting until after the buydown period ends to maximize your savings.
What's the difference between a temporary and permanent buydown?
A temporary buydown (like 2-1 or 3-2-1) reduces the rate for only the first few years, then returns to the note rate. A permanent buydown uses discount points to permanently lower the interest rate for the entire loan term.
Ready to Lower Your Mortgage Rate?
Understanding buydowns is just the beginning. Our mortgage experts can help you find the best buydown options and rates for your situation.