2-1 Buydown Calculator
See your lower payments in year one and two, and how much a 2-1, 3-2-1 or 1-0 buydown actually costs.
2-1 buydown calculator
Estimates for learning only — not a loan offer. Real numbers come from a lender’s Loan Estimate.
How a temporary buydown works
A temporary buydown lowers your mortgage rate for the first year or few years, then steps up to the full “note rate.” In a 2-1 buydown, the rate is 2 points lower in year one, 1 point lower in year two, and normal from year three on.
The lower payments aren’t magic. Someone, often the seller or a home builder, pays the difference up front into an account that tops up your payment each month. That up-front amount is the buydown cost this calculator shows.
| Type | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| 3-2-1 | Rate − 3 | Rate − 2 | Rate − 1 |
| 2-1 | Rate − 2 | Rate − 1 | Full rate |
| 1-0 | Rate − 1 | Full rate | Full rate |
Buydown vs a price cut vs points
If a seller offers you $9,000, you could take it as a temporary buydown, a lower price, or discount points that lower your rate for the whole loan. A temporary buydown helps most if you expect your income to rise or plan to refinance if rates fall. Points make more sense if you’ll keep the loan for many years. Compare full payments with the mortgage calculator.
FAQ
Who pays for a 2-1 buydown?
Often the seller or builder, as a concession. Buyers and lenders can also fund it. The money is set aside at closing.
Is a 2-1 buydown worth it?
It can be if a seller is paying for it and you’ll be fine with the full payment in year three. Make sure the full payment fits your budget before you sign.
What happens to unused buydown money if I refinance?
Rules vary by loan program. Under Fannie Mae guidelines, leftover funds are generally applied to reduce your loan balance or follow the buydown agreement terms. Ask your lender.
Can I get a buydown on an FHA or VA loan?
Temporary buydowns are allowed on many FHA, VA and conventional loans, but each program has its own rules and seller-concession limits.
Sources: Fannie Mae Selling Guide B2-1.4-04 (temporary interest rate buydowns). Estimates for education only. Keys & Coffee is not a lender.