Mortgage Rate Buydown Calculator
A temporary buydown has a price, a funder, and an expiry date. All three belong in the decision.
What This Calculator Does
A temporary buydown — commonly a 2-1 or a 3-2-1 — is priced out here: the reduced payment in each subsidized year, the full note payment you return to afterward, and the total escrowed amount a seller or builder must fund to create it. That same money is then set against a straight price reduction so you can see which leaves you better off.
Who Is This For
Ideal for buyers offered a builder or seller credit across Miami and South Florida, negotiators choosing between a rate buydown and a lower price, and anyone who wants to see the payment once the subsidy has run out.
How It Works
Enter the loan amount, the note rate, and the buydown structure on offer. The calculator lays out each year's payment, the escrow that credit must fund, and the equivalent price reduction the same money would purchase.
Frequently Asked Questions
How does a temporary buydown work?
A lump sum is funded up front and held in escrow, covering the difference between a reduced payment and the full note payment across the loan's opening years. A 2-1 buydown lowers the rate by two points in the first year and one point in the second before the note rate takes over; a 3-2-1 applies the same idea across three years.
Whose money funds it?
Usually the seller's or the builder's, as a concession negotiated into the contract and deposited at closing. A buyer can fund one too, though that seldom makes sense when the same cash could go toward the down payment or a permanent rate reduction instead.
Buydown or price reduction?
It turns on how long you keep the loan. A buydown concentrates its entire value in the opening years, so it wins where your budget is tightest at the start. A price reduction lowers the loan for the full term and lowers your Florida property tax basis along with it, so it wins across a long hold. The calculator puts the same dollar amount into both columns.
What happens once it expires?
You pay the full note payment, which was always the real payment. Lenders qualify you at the note rate for exactly that reason. Where the budget only works during the subsidized years, the structure is concealing a problem rather than solving one.
Are the escrowed funds refunded on an early exit?
The unused portion is generally applied to the loan rather than forfeited, though the treatment differs by program. Get it in writing from your lender before closing rather than assuming, because the sum involved is not small.
Does a buydown lower my actual rate?
No. The note rate remains whatever you locked; the buydown subsidizes the payment temporarily and nothing more. With benchmark 30-year rates near 6.6-6.7% in mid-2026, a buydown makes the first years feel like a lower-rate market without altering the loan you actually signed.