Mortgage Rate Buydown Calculator
See what a temporary buydown costs, and whether a price reduction serves you better.
What This Calculator Does
Prices a temporary buydown structure by showing the reduced payment in each subsidized year, the full note payment afterward, and the escrowed amount required, then compares that cost against an equivalent straight price reduction.
Who Is This For
Buyers offered a builder or seller credit, negotiators deciding between a rate buydown and a lower price, and anyone who wants to see the payment once the subsidy ends.
How It Works
Enter the home price, down payment, note rate, loan term, and buydown structure to see each year's payment, the required escrow, and the equivalent price reduction the same funds would represent.
Frequently Asked Questions
What is a temporary buydown?
A temporary buydown is a lump sum held in escrow that covers the gap between a reduced payment and the full note payment for the first two or three years of a loan, depending on the structure chosen.
Who typically funds a buydown?
A seller or builder commonly funds a buydown as a negotiated concession, though a buyer can fund one directly; compare the cost against other uses of the same funds before choosing this route.
Is a buydown better than an equivalent price reduction?
It depends on how long the loan is held: a buydown concentrates its value in the early years, while a price reduction lowers the loan amount for the full term, so the better choice depends on your expected holding period.
What happens once the buydown period ends?
The borrower pays the full note payment, and the note rate is the one used for qualification; if the budget only works during the subsidized years, that is a signal to reconsider the loan amount rather than rely on the buydown.