Temporary Buydown Calculator
A temporary buydown lowers your interest rate for the first one to three years of your loan. After that, your rate steps up to your full note rate (which is the rate on your loan) and stays there.
The numbers in the name tell you how far the rate drops each year. For example, a 2-1 buydown means your rate is 2% lower in year one and 1% lower in year two.
Choose a buydown type below, add your loan details, and see what your payment could look like each year.*
| Year | Rate | Full monthly payment | Monthly payment with buydown | Monthly savings | Annual savings |
|---|---|---|---|---|---|
| Results will display here | |||||
Disclaimer: this calculator is offered for illustrative and educational purposes only and it is not intended to replace a professional estimate. See additional disclosures below at bottom of page.
How to use the temporary buydown calculator
Pick your buydown type first: 1-0, 2-1, or 3-2-1.
Then choose your loan term, such as 30 years. Enter your interest rate, which is your note rate before any buydown. Then enter your total loan amount. That’s your home price minus your down payment, not the price of the home.
Select Calculate, and the table shows each year of your buydown. For every year you’ll see your rate, your full monthly payment, your monthly payment with the buydown, and how much you save each month and for the year.
Your total buydown cost appears below the table. That’s the estimated amount needed to fund the buydown at closing.
Try each type with the same loan to compare. A 3-2-1 gives you the biggest payment break in year one, and a 1-0 costs the least to fund.
Temporary buydown types: 1-0, 2-1, and 3-2-1
The type you choose sets how many years your rate is lowered and by how much. Each number is the amount your rate drops below your note rate in that year. After the last number, you pay your full rate.
1-0 buydown
Your rate is 1% lower in year one. In year two, you pay your full note rate. This is the shortest and lowest-cost option, and it fits buyers who want a small break while they settle into a new home.
2-1 buydown
Your rate is 2% lower in year one and 1% lower in year two. In year three, you pay your full note rate. This is the most common type. It gives you two years of step-up payments without the higher upfront cost of a three-year buydown.
3-2-1 buydown
Your rate is 3% lower in year one, 2% lower in year two, and 1% lower in year three. In year four, you pay your full note rate. It gives you the most room in your budget early on and costs the most to fund.
Use the calculator above to compare all three on your own loan.
*Calculator results do not reflect all loan types and are subject to individual program loan limits. All calculations and costs are estimates and therefore, Loan officers do not make any guarantee or warranty (express or implied) that all possible costs have been included. The assumptions made here and the output of the calculator do not constitute a loan offer or solicitation, or financial or legal advice. Please connect with a Movement Mortgage loan officer for a formal estimate. Every effort is made to maintain accurate calculations; however, Movement Mortgage assumes no liability to any third parties that rely on this information and is not responsible for the accuracy of rates, APRs or any other loan information factored in the calculations. *Temporary buydown options require a portion of the interest to be paid in advance and collected at closing, which will be held in escrow. These funds will cover a portion of the monthly payments for the selected buydown term. Not available on all programs, such as most bond products, reverse products, etc. Other exclusions may apply. Seller, builder or lender may be required to provide credit towards temporary rate buydown. Monthly and annual savings are defined as dollar amounts paid from buydown funds. Borrower must meet program eligibility and qualify based on the note rate of the program selected. All loans subject to underwriter approval; terms and conditions may apply. Subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.
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We can help you see which buydown options fit your loan and walk you through the numbers for your purchase.
