Temporary Buydown Calculator
See your payment each year with a 3-2-1, 2-1 or 1-0 temporary buydown, and what the buydown costs. Based on VA and Fannie Mae buydown rules.
Temporary Buydown Calculator
3-2-1 · 2-1 · 1-0 · Year-by-year payments
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How to Use the Temporary Buydown Calculator
- Enter your loan amount and note interest rate.
- Choose the loan term and buydown type: 3-2-1, 2-1 or 1-0.
- Click Calculate Buydown.
The temporary buydown calculator shows your payment each year, how much the buydown account pays and the total buydown cost. Use the temporary buydown calculator to compare a buydown with other seller concessions.
How a Temporary Buydown Works
A temporary buydown lowers your interest rate for the first one to three years. Money set aside in a buydown account at closing pays the difference between the reduced payment and the full payment. After the buydown period, you pay the full note-rate payment for the rest of the loan.
A 2-1 buydown lowers the rate by 2% in year one and 1% in year two. A 3-2-1 buydown starts 3% lower and steps up 1% each year. A 1-0 buydown lowers the rate by 1% for year one only.
Buydown rules
- VA loans: the buydown must last at least 1 year and no more than 3 years, and payment increases happen on each anniversary of the first payment. The lender must qualify you at the full payment. A buydown paid by the builder or seller counts as a seller concession.
- Conventional loans (Fannie Mae): the rate can be reduced by up to 3%, with increases of no more than 1% a year, over no more than 3 years. You qualify at the note rate. Seller or other interested-party funding counts toward contribution limits. Cash-out refinances and investment properties are not eligible.
- FHA and USDA loans: these programs have their own buydown rules. Check with your lender.
Temporary Buydown FAQ
Who pays for a buydown?
The seller, builder, lender or the buyer can fund the buydown account. When a seller or builder pays, it counts as a seller concession.
Do I qualify at the lower rate?
No. VA and Fannie Mae both require the lender to qualify you at the full note-rate payment.
What does a buydown cost?
The cost is the total of the monthly differences between the full payment and the reduced payments during the buydown period. This calculator adds those up for you.
