Temporary Mortgage Buydown Calculator
Estimate the initial principal-and-interest payments and subsidy cost for a temporary mortgage buydown. Compare 2-1, 3-2-1 and other available structures with the full note-rate payment.
Get a Personalized Purchase Scenario
How to Use the Buydown Calculator
- Enter the loan amount.
- Enter the full note rate and mortgage term.
- Select the temporary buydown structure.
- Review the payment for each buydown year.
- Compare those payments with the full note-rate payment that begins after the temporary period.
The note rate is the contractual interest rate on the mortgage. A temporary buydown uses deposited funds to cover part of the required payment during the initial period; it does not permanently change the note rate.
Understanding the Result
Full note-rate payment
The estimated principal-and-interest payment after the temporary buydown ends.
Temporary payment
Calculated using the rate reduction assigned to that year.
Monthly payment assistance
The difference between the full note-rate payment and the temporary payment.
Estimated subsidy cost
The total of those monthly differences during the buydown period.
Property taxes, homeowners insurance, mortgage insurance and HOA dues are not reduced by the temporary buydown.
Worked Example
Illustrative example only—not a rate quote.
For a $400,000, 30-year mortgage with a 6.50% note rate, the estimated principal-and-interest payment is approximately $2,528. With an illustrative 2-1 temporary buydown:
- Year 1 payment, calculated at 4.50%: approximately $2,027
- Year 2 payment, calculated at 5.50%: approximately $2,271
- Year 3 and after, at the 6.50% note rate: approximately $2,528
- Estimated total subsidy needed: approximately $9,104
Actual program eligibility, funding and qualification requirements vary. Borrowers should be prepared for the full note-rate payment.
Temporary vs. Permanent Buydowns
A temporary buydown reduces the initial payment for a limited period. A permanent buydown generally involves paying discount points to obtain a lower note rate for the life of the loan. They solve different problems and should be compared using the expected time in the mortgage, upfront cost and long-term payment.
Get a Personalized Purchase Scenario
Compare the full note-rate payment, temporary payment schedule, subsidy cost and available credits for your specific purchase.