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Temporary buydown calculator

Compare a 2-1, 3-2-1, or 1-0 temporary mortgage buydown. Choose Conventional, FHA, VA, or USDA, then enter a loan amount or home price to see the payment path, applicable program costs, and subsidy required.

The mortgage rate does not change. A subsidy covers part of the early scheduled payment. The borrower must qualify using the lender's required payment.

Estimated subsidy$9,103.68View details ↓

Your scenario

Enter the loan details

Buydown structure

3-2-1 2-1 1-0

Start with

Loan amount only Home price + down

Loan program

Conventional FHA VA USDA

Loan amountBase loan before any financed upfront fee. Estimated home value optionalUsed only for PMI, FHA MIP, or a VA funding fee. The calculator derives LTV.

Mortgage interest rateUse the rate from the lender's quote. Loan termWhole years, up to 30. USDA uses 30 years.

Credit-score range needed for PMI above 80% LTVLoanSifter benchmark PMI is included after you choose the matching range.

Optional housing costsOnly if you want them in the payment

Program fees and mortgage insurance are calculated above. Leave these housing costs blank for principal, interest, and applicable program insurance only; they never change the subsidy.

Property taxes / year optionalAnnual amount. Home insurance / year optionalAnnual amount. HOA dues / month optionalMonthly amount.

Estimated subsidy required

$9,103.68

Estimate ready

Conventional · 2-1 · 30 years

Base loan$400,000.00

Estimated note$400,000.00

Upfront program fee$0.00

Mortgage insuranceNot included

Note-rate P&I$2,528.27

Known monthly subtotal$2,528.27

Monthly subtotals exclude property taxes, homeowners insurance, HOA dues, and mortgage insurance. The subsidy calculation is still complete.

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Temporary buydown payment schedule
Period	Payment-equivalent rate	Known subtotal	Monthly reduction	Subsidy

Text this scenario to Fred Start my 2-minute snapshot

Planning estimate only. Program fees and mortgage insurance use the same purchase assumptions as the payment calculator. FHA MIP and the USDA annual fee are illustrative first-year amounts and are held level in this payment-path display; actual amounts can change. Conventional PMI uses the documented LoanSifter benchmark. A temporary buydown does not change the note rate or loan terms. Eligibility, funding, contribution limits, and final figures must be verified for the specific transaction.

Read the result correctly

How a temporary mortgage buydown works

3-2-1 buydownThe payment steps up over three years, then returns to the full note-rate payment in year four.

2-1 buydownThe payment-equivalent rate is two points lower in year one and one point lower in year two.

Program costsApplicable UFMIP, funding fees, guarantee fees, PMI, MIP, and annual fees are estimated from the program details you select.

Subsidy accountFunds set aside at closing cover only the principal-and-interest difference; monthly housing costs do not create subsidy.

A worked example

A 2-1 buydown on a $400,000 mortgage

Hypothetical assumptionsA $400,000 conventional loan, 30-year fixed term, and 6.50% note rate. This is an educational example, not a rate quote. Figures below include principal and interest only; taxes, insurance, HOA dues, mortgage insurance, and closing costs are excluded.

Year 1The borrower's monthly principal-and-interest portion is $2,026.74, calculated at a 4.50% payment-equivalent rate. The subsidy covers $501.53 of the full $2,528.27 payment each month.

Year 2The borrower's portion rises to $2,271.16, calculated at a 5.50% payment-equivalent rate. The monthly subsidy is $257.11.

Years 3–30The borrower pays the full $2,528.27 monthly principal and interest. The note rate stays at 6.50% throughout the loan.

Subsidy required($501.53 × 12) + ($257.11 × 12) = $9,103.68. This matches the calculator's cent-rounded monthly payments. Actual funding and rounding must be confirmed with the lender.

Before choosing a buydown

2-1 buydown questions, answered

Does it lower my actual interest rate?No. A temporary buydown uses a funded account to supplement early payments; the mortgage note keeps its original terms. Fannie Mae explains how the subsidy works.

Can I qualify using the first-year payment?For a Fannie Mae loan, the lender qualifies you at the note rate, without the temporary reduction. Confirm the rules for your loan program and budget for the full payment. See Fannie Mae's buydown requirements.

Can a seller credit fund it?For an eligible Fannie Mae loan, seller-funded buydowns count toward interested-party contribution limits. The allowed amount depends on the transaction. Compare the proposed subsidy with other uses of the credit in your home purchase plan.

What should I compare next?Use the loan comparison calculator for quoted fixed-rate alternatives and their upfront costs. For an existing mortgage, review refinance options and break-even using your current balance and remaining term.