Buydown Calculator

Yes. Temporary buydowns are available on many rate-and-term and cash-out refinance loans, not just purchases. On a refinance, the buydown subsidy is typically paid by the lender as a credit or funded at closing, since there is no seller. Use the Refinance tab on the calculator above to compare your current payment against year-one refinance payments with a 1-0, 1-1, 2-1, or 3-2-1 buydown.

A 1-1 buydown reduces your interest rate by 1% for the first two years of the loan, then returns to the note rate in year three. It spreads moderate savings across two years instead of concentrating a larger reduction in year one, and typically costs about 2% of the loan amount.

On a refinance there is no seller, so the buydown subsidy is usually paid by the lender through a lender credit, or by the borrower at closing. Some lenders offer lender-paid buydown programs specifically for refinances. Ask your loan officer which structures are available for your loan type.

A 1-0 buydown reduces your interest rate by 1% in the first year, then returns to the note rate for the remainder of the loan. It is a popular temporary buydown option when you want lower year-one payments with a smaller upfront subsidy than a 2-1 or 3-2-1 program.

Enter your home price, down payment, note rate, and loan term. The calculator applies a 1% rate reduction in year one, compares your buydown payment to the full note-rate payment, and estimates the total buydown subsidy needed to fund the difference.

A 3-2-1 buydown calculator estimates your monthly payment when the interest rate is reduced by 3% in year one, 2% in year two, and 1% in year three, then returns to the note rate. Enter your home price, down payment, note rate, and loan term to see year-by-year payments and the total buydown subsidy required.

A 2-1 buydown typically costs about 2–3% of the loan amount, representing the total payment difference funded during the first two years. Use this calculator to estimate the exact subsidy based on your loan amount, rate, and term. Sellers often pay this cost as a concession.

A seller buydown is when the home seller (or builder) pays the upfront cost to temporarily reduce the buyer's interest rate for the first one to three years. This makes the home more affordable initially and can help buyers qualify. The subsidy is typically deposited into an escrow account at closing.

A temporary buydown (1-0, 2-1, or 3-2-1) lowers your rate for only the first few years, then returns to the note rate. Discount points permanently reduce your interest rate for the entire loan term. Use our discount points calculator to compare permanent rate reduction options. Discount Points Calculator.

A mortgage buydown is a financing technique where an upfront payment reduces your interest rate for the initial years of your mortgage. This lowers monthly payments during early homeownership, making it easier to afford your new home.

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.

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 more savings in the early years but requires a larger upfront subsidy.

Buydown costs vary based on loan amount, rate reduction, and lender policies. A 1-0 buydown typically costs about 1% of the loan amount, a 2-1 buydown costs 2–3%, and a 3-2-1 buydown costs 3–4%. The seller or builder may pay these costs as a concession.

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.

A buydown can be worth it if you need lower payments initially, expect your income to increase over time, or if the seller or builder is paying for it. Consider the upfront cost versus the monthly savings and how long you plan to stay in the home.

Yes, in both directions. You can refinance a mortgage that currently has a buydown at any time, though refinancing during the buydown period may forfeit remaining buydown benefits (many lenders credit unused escrow funds toward the payoff). You can also add a temporary buydown to a new refinance loan — use the Refinance tab on the calculator above to model it.

A temporary buydown (like 1-0, 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.