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The temporary buydown, illustrated.

A temporary buydown lowers the buyer's rate for the first year or two (2% then 1% on a 2-1), then it returns to the note rate. It is usually a seller or builder credit, and it often costs far less than an equivalent price cut.

Pick a buydown type, enter the loan, rate, and term, and see the subsidized payment, the monthly savings, the total subsidy, and what it costs in loan points. The numbers below are live, so drag them.
Buydown typeyears the rate is reduced

A 2-1 lowers your rate 2% the first year and 1% the second, then it returns to the full rate. 1-0 is one year; 3-2-1 is three.

Year 14.625%

$2,892.03/mo

Save $709.71/movs $3,601.75 at the note rate
Year 25.625%

$3,238.07/mo

Save $363.68/movs $3,601.75 at the note rate
Year 3 onward, at 6.625%$3,601.75/mo

Total buydown cost · 2-1

$12,881

About 2.29 points. Usually paid by the seller or builder and held in escrow.

Your payment, year 1

$2,892.03/mo

vs $3,601.75/mo at the full rate

Run a real buydown scenario with Brett →

Estimate only. The qualifying rate defaults to today's average from our live rate feed for a well-qualified buyer with 25% down; edit it to match your scenario. Principal & interest at the rates shown; excludes taxes, insurance, HOA, and MI. A temporary buydown lowers the rate for the first 2 years; the loan is underwritten at the full qualifying rate, and the subsidy cannot exceed the maximum interested-party contributions for the product. Informational only · not a commitment to lend · rates and terms subject to change.

When a buydown wins

  • A seller wants to move a listing without dropping the price. A buydown credit gives buyers a bigger early-payment break per dollar.
  • A buyer expects income to rise, or plans to refinance when rates ease. The temporary relief bridges the gap.
  • Competing offers: a buydown credit can out-feel a small price reduction in the buyer's monthly reality.

Straight answers

A temporary rate reduction. The rate is 2% lower in year one and 1% lower in year two, then returns to the full note rate for the rest of the loan.

Usually the seller or builder, as a credit held in escrow. It is often cheaper than an equivalent price cut and gives the buyer a bigger early-payment break per dollar.

The cost equals the total payment savings across years one and two. On a $775,000 loan at 6.375%, it is about $17,500, or roughly 2.26 points. Use the calculator to run your own numbers.

No. The loan is underwritten at the full note rate, so the buyer qualifies on the real long-term payment.

They set how many years the rate is reduced and by how much. 1-0 lowers year one by 1%. 2-1 lowers year one by 2% and year two by 1%. 3-2-1 lowers years one, two, and three by 3%, 2%, and 1%.

Your loan officer

Brett Hickman

Home First Financial

Brett Hickman

Mortgage Loan Originator · NMLS #2010859

+19493508005

Text Brett to check eligibility →