Temporary Buydown Calculator
What will the payment be before the rate steps back up?
A temporary buydown places funds in escrow at closing to lower the monthly payment for the first one to three years. The note rate never changes — the escrow covers the difference. Estimate the reduced payments and the escrow required to fund them.
Calculate the payments- Structures33-2-1 · 2-1 · 1-0
- Rate reductionUp to 3%First year
- Who can fund it4Lender, seller, builder, third party
- Licensed in19States
Build the scenario
Use estimated numbers if you are early in the process. Results update when you select Calculate.
Your estimated payments
Principal and interest only, amortized over the full loan term.
Payment schedule
| Year | Rate | Payment | Monthly gap | Annual gap |
|---|---|---|---|---|
| Enter a scenario to see the schedule. | ||||
How each structure works
The number of years the reduction lasts, and how much the rate is cut each year.
3-2-1 Buydown
The rate is reduced 3% in year one, 2% in year two and 1% in year three. The full note rate applies from year four onward. The largest escrow of the three, and the biggest early-payment relief.
2-1 Buydown
The rate is reduced 2% in year one and 1% in year two, with the full note rate from year three. The most commonly negotiated structure in a purchase contract.
1-0 Buydown
The rate is reduced 1% for year one only, then the full note rate applies. The smallest escrow, often used when the seller concession is limited.
The note rate never changes
A temporary buydown does not modify the loan terms. The borrower is qualified at the note rate, not the reduced rate.
The escrow is funded at closing
The full subsidy is deposited at closing and released monthly to cover the payment gap until the buydown period ends.
Contribution limits apply
When a seller, builder or other interested party funds the buydown, the amount counts toward interested party contribution limits set by the loan program.
This calculator provides an estimate for informational purposes only and is not a loan approval, pre-approval, rate quote, Loan Estimate, rate lock, or commitment to lend. Results are based on the information entered and estimate principal and interest only. The calculation does not include property taxes, homeowners insurance, HOA dues, mortgage insurance, prepaid items, escrow setup, discount points, title fees, recording fees, or other closing costs, so the actual payment obligation will be greater. Payments during the buydown period are amortized at the reduced rate over the full loan term. Borrowers are qualified at the note rate, not the reduced rate. Buydown availability, permitted contributors, and interested party contribution limits vary by loan program, occupancy, and loan-to-value, and certain loan programs do not permit temporary buydowns. Actual loan terms, interest rate, payment, and eligibility may vary based on credit profile, property value, loan program, occupancy, debt-to-income ratio, underwriting requirements, investor guidelines, and market conditions. Rates and terms are subject to change without notice. Please speak with a HomeLend Mortgage loan expert for a personalized quote.
