Temporary rate buydown (2-1, 3-2-1)

A temporary buydown lowers the rate for the first year or years, then the loan steps up to its regular rate. Enter the loan and the buydown type to see each year's payment and the amount that has to be put aside, often by a seller or builder, to cover the difference. The cost your lender quotes can differ, so check a Loan Estimate.*

Home price ($) The price you would pay for the home. Use the listing price or the price in your offer. Down payment (%) The part of the price you pay in cash at closing. 5 means 5%. The rest becomes the loan amount. Regular (note) interest rate (%) The loan's regular interest rate, the one it settles at after the buydown ends. The buyer is usually qualified at this rate. Loan term How many years the loan is spread over. A longer term lowers the monthly payment but adds more interest over time. Buydown type How big the early discount is and how long it lasts. 2-1 means the rate is 2 points lower in year 1 and 1 point lower in year 2. 3-2-1 steps down for three years. 1-0 is only year 1. Seller or builder contribution available ($) Leave at 0 to only see the amount needed.

The note under each box says what to enter and where to find it.

* The numbers already filled in are examples. They are not current rates or an offer. Replace them with your own.

How to read these numbers

Amount needed to fund the buydown: the early-year payment savings added together. Someone, often a seller or builder, pays this up front so the lender can top up your payment each month. Ask the lender what happens to any money that is left over.
Year 1 payment vs. regular payment: the regular payment is what the loan costs once the buydown ends. Plan your budget around that number, not the lower early payments.
The table shows how the rate and payment step up each year until they reach the regular rate. The chart shows the two cumulative lines: the gap between them is the buydown at work, and it stops growing after the buydown years.
Try it: switch between 2-1 and 3-2-1 and watch the amount needed rise. A bigger early discount costs more to fund.