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Mortgage Rate Buydown Calculator

Because mortgage rates have been elevated since rising from record lows in 2021, lenders and builders have increasingly offered mortgage rate buydowns to lure in customers.

These are temporarily bought-down rates that offer some payment relief for one to three years before reverting to the original note rate.

For example, a mortgage lender or home builder may offer a 3-2-1 buydown, which gives you a rate 3% below the note rate in year one, 2% below in year two, and 1% below in year three.

That lessens the blow of the high interest rate, but the cost has to come from somewhere, which might mean a higher home purchase price (all else equal) or a higher note rate once the buydown goes away.

Give my mortgage rate buydown calculator a whirl to see how much you can “save” to determine if it’s a good deal.

Mortgage Rate Buydown Calculator

See your reduced payment for a 2-1, 3-2-1, 1-1, or 1-0 temporary rate buydown, what it costs to fund, and when your payment steps back up to the full note rate.

Loan Details

$
$
%
 
%
The permanent rate after the buydown ends

Buydown Structure

For context only — doesn’t change the math
Optional — used to date the step-up

Year-by-Year Breakdown

Your Payment Over Time

Amortization Schedule

Disclaimer: This calculator is for informational and educational purposes only and does not constitute financial, legal, or tax advice. A temporary buydown does not change how your loan amortizes — your loan balance pays down based on the full note rate and note-rate payment the entire time, exactly as if no buydown existed. The buydown funds (typically deposited into an escrow-like account at closing by the seller, builder, or lender) simply cover the difference between your reduced payment and the full note-rate payment each month; your balance is unaffected by which party is covering that difference. Not all loan programs or lenders permit temporary buydowns, and some loan types restrict who may fund one. Figures shown are principal and interest only and do not include taxes, insurance, HOA dues, or PMI. If you sell or refinance before the buydown period ends, any remaining unused buydown funds are typically refunded and applied to pay down your outstanding loan balance, though terms can vary by lender and agreement — confirm this with your lender. Consult a licensed mortgage professional for your exact terms.

How to Use the Mortgage Rate Buydown Calculator

First, enter the purchase price of the property you’re buying and the proposed down payment (either a dollar amount or percentage).

Next, enter the note rate, which is the actual mortgage rate once the temporary buydown period ends.

So if the rate is 6.5% and they’re offering a 3-2-1 buydown, you’d receive a rate of:

  • 3.5% in year one
  • 4.5% in year two
  • 5.5% in year three

Then for the remaining 27 years the rate would revert back to the 6.5% note rate.

Speaking of buydown types, there are several popular ones, including the 3-2-1, the 2-1, 1-1, and 1-0.

Choose the one being offered from the dropdown menu and then enter who is paying for it, whether it’s you, the lender, or the builder.

Many home builders will offer these to make a home purchase more palatable/attractive.

[Searching for a home loan? See your options with dozens of lenders fast.]

Yes, they’re “paying for it” but arguably via a higher sales price if it didn’t have the buydown.

Same with a lender who can cover it via a lender credit. Again, you’re not “paying for it” directly, but a lender credit generally increases your mortgage rate.

For example, the same loan without the lender credit might come with a rate of 6% instead of 6.5%.

It’s also possible to just pay for it yourself, though in that case all you’re doing is prepaying a portion of the payments and setting it aside in a buydown account.

Anyway, that selection won’t change the math. It’ll just give you a different message once you’ve run the numbers to explain how it all works.

Lastly, you can enter a purchase date if you want to see when the bought-down payments go away.

The calculator will display the total cost of the buydown, your monthly payment each year, and the monthly savings for each year it’s in effect.

You’ll also see what the monthly payment would be without the buydown in place.

When to Choose the Temporary Buydown

Keep in mind that all a temporary buydown does is lower your monthly payment for 1-3 years.

It’s not a permanent rate reduction or payment reduction. And it requires funds equal to the difference in rate.

So it’s really just money set aside upfront in an escrow account that makes up this difference.

That’s not necessarily a bad thing, especially if someone else is paying for it, but it’s important to know what you’re getting.

If the note rate is 7%, it’ll go back to 7% after one, two, or three years.

Conversely, it’s possible to get a permanent buydown by paying discount points at closing.

This can be a good option if you plan on keeping the mortgage for a long time. Or want payment relief for the full loan term.

It’s possible to get a home seller or builder to pay for a permanent buydown as well. So take the time to compare both.

However, those who don’t plan to keep the loan for a long time might be best served with the temp buydown with the hope of a rate and term refinance to a lower mortgage rate at some point in the future.

Colin Robertson
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