Temporary Rate Buydown Calculator
Find out what a temporary buydown would cost you and whether cutting the price by the same amount would help you more as the buyer.
What This Calculator Does
This temporary buydown calculator prices the setup you have in mind. You see the lower payment in each subsidized year, the full payment after the subsidy ends, the escrow deposit required, and how the cost stacks up against an equal price reduction.
Who Is This For
Holding a credit from a builder or seller? Trying to decide whether to ask for a lower rate or a lower price? Or simply wondering what the mortgage costs once the subsidy is gone? Run the numbers here first.
How It Works
Start with the price and your down payment. Then add the note rate, the loan term and the buydown structure. You get the payment year by year, the amount escrow has to hold, and what that same money looks like as a price reduction.
Frequently Asked Questions
What is a temporary buydown?
It's a single upfront payment that sits in escrow. Each month, it makes up the difference between your reduced payment and the full payment on the note. The structure you pick decides how long that help runs: one, two or three years at the start of your mortgage.
Who usually pays for a buydown?
Typically the seller or the builder funds it, as a negotiated concession, but you can pay for it yourself. Before committing, set the buydown's price against the other ways that money could work for you.
Is a buydown or an equal price cut the better deal?
The deciding factor is how many years you'll carry the loan. A buydown delivers all its savings early, in the first years, while a lower price means borrowing less, which trims every payment for as long as the loan lasts. Choose based on how long you expect to keep it.
What do I pay after the buydown ends?
When the subsidy ends, you owe the full payment at the note rate, and that same rate is what lenders use to qualify you. If your budget holds up only during the reduced years, the answer is to borrow less rather than lean on a buydown.