Mortgage buydown calculator
A temporary buydown can lower your mortgage payment during the first one, two, or three years of your loan — giving you time to ease into your full monthly payment.
See how 3-2-1, 2-1, and 1-year buydowns work, then use our calculator to compare the numbers.
A temporary mortgage buydown is a financing arrangement that temporarily reduces the portion of the mortgage payment paid by the borrower during the first one or more years of the loan.
The mortgage itself still has its normal note rate. A temporary interest rate buydown does not permanently change that rate. Instead, money is contributed to a buydown account at closing. Each month during the temporary period, money from that account helps make up the difference between the reduced payment you make and the full scheduled mortgage payment.
After the temporary buydown period ends, you begin making the full payment based on the mortgage's note rate.
A temporary buydown does not mean the actual mortgage rate changes every year. The mortgage note rate generally remains the same. The temporary buydown subsidizes a portion of the payment during the introductory period.
If the mortgage note rate were 6.50%, the payment the borrower makes would be calculated from the rates below. The note rate itself would still be 6.50%.
Three years of gradually increasing payments before reaching the full note-rate payment.
Year 1
3.50%
Payment calculated using 3% below the note rate
Year 2
4.50%
Payment calculated using 2% below the note rate
Year 3
5.50%
Payment calculated using 1% below the note rate
Year 4 and beyond
6.50%
Full payment at the note rate
Two years of reduced payments before reaching the full note-rate payment.
Year 1
4.50%
Payment calculated using 2% below the note rate
Year 2
5.50%
Payment calculated using 1% below the note rate
Year 3 and beyond
6.50%
Full payment at the note rate
One year of reduced payments before reaching the full note-rate payment.
Year 1
5.50%
Payment calculated using 1% below the note rate
Year 2 and beyond
6.50%
Full payment at the note rate
Availability of each buydown structure depends on the mortgage program, property, transaction, and applicable underwriting guidelines.
Depending on the mortgage program and the transaction, a temporary buydown may potentially be funded by a permitted source. Seller, builder, and other interested-party contributions are subject to that program's contribution limits. Not every source is permitted for every mortgage.
The best choice depends on the individual transaction, including the purchase contract, the loan program, and how the contribution limits apply.
Instead of a seller simply reducing the sales price, a buyer and seller may decide that using some negotiated seller concessions toward a temporary buydown provides the buyer with greater short-term payment relief.
A temporary vs permanent buydown comparison comes down to how long the lower payment lasts and whether the note rate itself changes. Neither option is labeled better here.
| Temporary Buydown | Permanent Buydown | |
|---|---|---|
| How long does it last? | Usually 1–3 years, depending on the program and structure. | The lower note rate remains for the life of the mortgage unless the loan is refinanced, paid off, or otherwise ended. |
| Does the mortgage note rate change? | No. The note rate generally remains unchanged. | Yes. Discount points or another permitted pricing structure are used to obtain a lower note rate. |
| Initial monthly payment | Lower during the temporary buydown period. | Lower payment based on the permanently reduced note rate. |
| Payment later | Increases on a predetermined schedule until it reaches the full note-rate payment. | Principal and interest generally stay based on the permanently reduced fixed rate on a fixed-rate mortgage. |
| Upfront cost | Funds are deposited to subsidize the temporary payment difference. | Typically involves paying discount points or other permitted pricing costs to obtain the lower interest rate. |
| When it may be worth considering | May be worth considering when short-term payment relief is important. | May be worth considering when long-term payment and interest savings are the priority. |
Temporary buydown
Usually 1–3 years, depending on the program and structure.
Permanent buydown
The lower note rate remains for the life of the mortgage unless the loan is refinanced, paid off, or otherwise ended.
Temporary buydown
No. The note rate generally remains unchanged.
Permanent buydown
Yes. Discount points or another permitted pricing structure are used to obtain a lower note rate.
Temporary buydown
Lower during the temporary buydown period.
Permanent buydown
Lower payment based on the permanently reduced note rate.
Temporary buydown
Increases on a predetermined schedule until it reaches the full note-rate payment.
Permanent buydown
Principal and interest generally stay based on the permanently reduced fixed rate on a fixed-rate mortgage.
Temporary buydown
Funds are deposited to subsidize the temporary payment difference.
Permanent buydown
Typically involves paying discount points or other permitted pricing costs to obtain the lower interest rate.
Temporary buydown
May be worth considering when short-term payment relief is important.
Permanent buydown
May be worth considering when long-term payment and interest savings are the priority.
These are possible reasons buyers look at a temporary buydown. They are not a promise of savings or a guaranteed financial benefit.
Reduce the amount you personally pay toward principal and interest during the temporary period.
A lower starting payment can provide breathing room during the first years after you buy a home.
The payment schedule is set up front, so the increases are known rather than a surprise adjustment.
When the program allows it, seller concessions may be used to fund a seller-paid buydown.
When another permitted party funds the buydown, you may be able to keep more cash for moving, furnishings, improvements, or reserves.
The temporary payment does not last forever. Before you rely on the introductory reduction, make sure the full note-rate payment fits your budget.
Many programs review the full note-rate payment when deciding whether the loan fits. Qualification is not based on the reduced temporary payment.
The buydown has a cost. Money is set aside at closing to cover the difference between the payment you make and the full scheduled payment.
Seller concessions might otherwise go toward closing costs, a price reduction, or other costs the program allows. A buydown is one possible use.
A later refinance is not guaranteed. Rates, credit, home value, and qualification rules can all change before the temporary period ends.
A refinance should never be required for the strategy to make sense.
Enter your own numbers. The comparison updates as you change them. Rates are not shown below zero. Dollars include cents, and rates show up to three decimals when needed.
Full note-rate principal and interest
$2,212.24
per month at 6.5% for 30 years
Three years of reduced payments
Two years of reduced payments
One year of reduced payments
Total subsidy for this structure: $15,652.80Loan Percentage: 4.472%
Total subsidy for this structure: $7,965.84Loan Percentage: 2.276%
Total subsidy for this structure: $2,699.76Loan Percentage: 0.771%
This mortgage buydown calculator is for education only. It is not a Loan Estimate, Closing Disclosure, offer of credit, or a commitment to lend. Payments are estimates based on the loan amount, note rate, and term you enter, using a standard fixed principal-and-interest calculation for the full loan term. Mortgage insurance is not calculated. Monthly taxes, homeowners insurance, and HOA dues are added only to the estimated total housing payment and are not reduced by the buydown. The note rate does not change during a temporary buydown. Whether a 3-2-1, 2-1, or 1-year buydown is available, and who may fund it, depends on the loan program, property, credit, and underwriting guidelines, and can change. These figures do not assume a future refinance.
Opens the browser print window, including Save as PDF.
A temporary mortgage buydown lowers the portion of the mortgage payment you pay for a set time, usually the first one, two, or three years. The loan still has its normal note rate. Money contributed at closing helps make up the difference, and then you begin making the full note-rate payment.
No. The mortgage note rate generally stays the same. A temporary interest rate buydown subsidizes part of the payment during the introductory period. It does not mean the actual rate on the note changes every year.
With a 3-2-1 buydown, the payment is calculated as if the rate were 3 percentage points lower in year one, 2 points lower in year two, and 1 point lower in year three. After that, the full note-rate payment begins. If the note rate were 6.50%, that example would be 3.50%, then 4.50%, then 5.50%, then 6.50%.
A 2-1 buydown reduces the payment for two years. Year one is calculated 2 percentage points below the note rate, and year two is calculated 1 point below. The full note-rate payment begins in year three. On a 6.50% note rate, that example is 4.50%, then 5.50%, then 6.50%.
A 1-0 buydown, also called a one-year buydown, reduces the payment for one year, usually 1 percentage point below the note rate. On a 6.50% note rate, the example payment is calculated at 5.50% in year one, then at 6.50% after that.
Depending on the mortgage program and the transaction, a temporary buydown may be funded by a home seller, home builder, lender, or another eligible party. Seller, builder, and other interested-party contributions are subject to program limits. Not every source is allowed on every loan, and the better fit depends on that transaction.
A temporary buydown usually lasts one to three years and leaves the note rate unchanged. A permanent buydown uses discount points or another permitted pricing structure to lower the note rate itself. One is aimed at short-term payment relief. The other is aimed at a lower rate for the life of the loan. Neither is automatically the better choice.
Often, no. Many loan programs look at the full note-rate payment, not the reduced payment you make while the buydown is in effect. The rule depends on the program, so it is worth confirming before you write an offer around the lower payment.
It estimates principal and interest, then adds any monthly taxes, insurance, and HOA dues you enter to the total housing payment. Those extras are not reduced by the buydown. Mortgage insurance is not calculated. Results are estimates, show dollars with cents, and do not show a rate below zero.
No. A refinance should never be required for the strategy to make sense. Plan to afford the full note-rate payment when the temporary period ends, even if you hope to refinance someday.
Ryan Minick and Steve DeLon can walk through whether a temporary buydown fits the loan, the property, and the way the purchase is structured.
Temporary Mortgage Buydown Comparison
The 2 Mortgage Guys
October 4, 2026
| Loan amount | $350,000.00 |
|---|---|
| Note rate | 6.5% |
| Term | 30 years |
| Monthly property taxes | $0.00 |
| Monthly homeowners insurance | $0.00 |
| Monthly HOA dues | $0.00 |
| Full note-rate principal and interest | $2,212.24 |
| Estimated total housing payment | $2,212.24 |
Mortgage insurance is not included. Taxes, insurance, and HOA dues are not reduced by the buydown.
| Option | Year 1 rate | Year 1 principal and interest | Year 1 total housing | Total subsidy | Loan Percentage |
|---|---|---|---|---|---|
| 3-2-1 Buydown | 3.5% | $1,571.66 | $1,571.66 | $15,652.80 | 4.472% |
| 2-1 Buydown | 4.5% | $1,773.40 | $1,773.40 | $7,965.84 | 2.276% |
| 1-0 / 1-Year Buydown | 5.5% | $1,987.26 | $1,987.26 | $2,699.76 | 0.771% |
Total subsidy: $15,652.80. Loan Percentage: 4.472%. Total payment reduction versus the full note-rate payment: $15,652.80.
| Year | Effective rate | Principal and interest | Total housing | Monthly reduction | Yearly reduction | Subsidy |
|---|---|---|---|---|---|---|
| Year 1 | 3.5% | $1,571.66 | $1,571.66 | $640.58 | $7,686.96 | $7,686.96 |
| Year 2 | 4.5% | $1,773.40 | $1,773.40 | $438.84 | $5,266.08 | $5,266.08 |
| Year 3 | 5.5% | $1,987.26 | $1,987.26 | $224.98 | $2,699.76 | $2,699.76 |
| Year 4 and beyond | 6.5% | $2,212.24 | $2,212.24 | $0.00 | $0.00 | $0.00 |
Total subsidy: $7,965.84. Loan Percentage: 2.276%. Total payment reduction versus the full note-rate payment: $7,965.84.
| Year | Effective rate | Principal and interest | Total housing | Monthly reduction | Yearly reduction | Subsidy |
|---|---|---|---|---|---|---|
| Year 1 | 4.5% | $1,773.40 | $1,773.40 | $438.84 | $5,266.08 | $5,266.08 |
| Year 2 | 5.5% | $1,987.26 | $1,987.26 | $224.98 | $2,699.76 | $2,699.76 |
| Year 3 and beyond | 6.5% | $2,212.24 | $2,212.24 | $0.00 | $0.00 | $0.00 |
Total subsidy: $2,699.76. Loan Percentage: 0.771%. Total payment reduction versus the full note-rate payment: $2,699.76.
| Year | Effective rate | Principal and interest | Total housing | Monthly reduction | Yearly reduction | Subsidy |
|---|---|---|---|---|---|---|
| Year 1 | 5.5% | $1,987.26 | $1,987.26 | $224.98 | $2,699.76 | $2,699.76 |
| Year 2 and beyond | 6.5% | $2,212.24 | $2,212.24 | $0.00 | $0.00 | $0.00 |
This mortgage buydown calculator is for education only. It is not a Loan Estimate, Closing Disclosure, offer of credit, or a commitment to lend. Payments are estimates based on the loan amount, note rate, and term you enter, using a standard fixed principal-and-interest calculation for the full loan term. Mortgage insurance is not calculated. Monthly taxes, homeowners insurance, and HOA dues are added only to the estimated total housing payment and are not reduced by the buydown. The note rate does not change during a temporary buydown. Whether a 3-2-1, 2-1, or 1-year buydown is available, and who may fund it, depends on the loan program, property, credit, and underwriting guidelines, and can change. These figures do not assume a future refinance.