Calculators · Buying & Financing
Temporary Buydown Calculator (2-1, 1-0, 3-2-1)
Calculate payments and the total subsidy for a 2-1, 1-0, 1.5-0.5 or 3-2-1 temporary buydown, and check it against the seller concession limit.
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How this calculator works
In a temporary buydown, money deposited at closing (often paid by the seller or builder) covers part of your payment for the first one to three years. The note rate does not change: your loan is written and amortized at the full rate, and the escrowed funds make up the difference each month.
Because builders in the Houston area often offer buydowns as incentives, it helps to know exactly what one costs and when the full payment starts.
- Each year's reduced payment is the payment at the note rate minus that year's reduction, over the full loan length.
- Subsidy = 12 × (full payment − reduced payment), added up for each buydown year.
- Lenders usually qualify you at the full note-rate payment.
Worked example
Example values are illustrative, not quotes or market data. These are the numbers the calculator above starts with.
Inputs
- Home price
- $400,000
- Down payment
- $20,000 (5%)
- Note rate
- 7%
- Loan length
- 30 years
- Buydown type
- 2-1 (2 years)
Results
- Loan
- $380,000
- Subsidy cost
- $8,857
- Year 1 payment
- $2,040
- Full payment
- $2,528
Common questions
Does a 2-1 buydown lower my rate?
Not on the note. You pay as if the rate were 2 points lower in year 1 and 1 point lower in year 2; from year 3 you pay the full note-rate payment.
Who pays for the buydown?
Usually the seller or builder as a concession, sometimes the lender or the buyer. It counts toward the program's limit on seller-paid costs.
What happens if I refinance during the buydown?
Ask the lender. Unused funds are often applied to the loan balance, but it depends on the program.
Related calculators
- Discount Points Calculator
- Mortgage Payment Calculator
- Buyer Cash to Close Calculator (Buyer Net Sheet)
- All calculators
Estimate only. Actual loan terms, eligibility, insurance, taxes, and settlement charges require verification. These are planning estimates, not a lender Loan Estimate, Closing Disclosure, appraisal, or approval. Michael O'Neal is a real estate broker, not a lender, appraiser, attorney or tax adviser.
Next step
Want a real financing quote? Connect with Home Front Mortgage.
Andrew Fairleigh, Mortgage Loan Originator, Home Front Mortgage, NMLS #1878546. (979) 595-8979 · [email protected]
Rates in these calculators are examples, not Home Front quotes. Your application goes to Home Front's secure site. Do not send financial documents through this website.
Affiliated business arrangement disclosure. This is to give you notice that some agents and owners at Keller Williams Realty Northeast, including Michael O'Neal, have a business relationship with certain providers of services related to your purchase, sale or refinance of real estate, including Home Front Mortgage and Keystone Title & Escrow. Because of this relationship, a referral may provide some owners and agents at Keller Williams Realty Northeast a financial or other benefit. You are NOT required to use either company as a condition for your purchase, your financing or refinance, or any other transaction related to a property. There are frequently other providers available with similar services. You are free to shop around to determine that you are receiving the best services and the best rate for these services. You will be given the written Affiliated Business Arrangement Disclosure, including estimated charges, to review and sign.