Mortgage Rate Buydown Calculator
See what a temporary buydown costs, who funds it, and whether a price cut would serve you better.
What This Calculator Does
Prices a temporary buydown — commonly a 2-1 or a 3-2-1 — by showing the reduced payment in each subsidised year, the full note payment you return to afterward, and the total escrowed amount a seller or builder has to fund to create it. Then it sets that same money against a straight price reduction so you can see which one leaves you better off.
Who Is This For
Buyers offered a builder or seller credit in Miami and South Florida, negotiators deciding between asking for a rate buydown or a lower price, and anyone who wants to know what the payment looks like once the subsidy runs out.
How It Works
Enter the loan amount, the note rate, and the buydown structure on the table. The calculator shows each year's payment, the escrow that credit has to fund, and the equivalent price reduction the same money would buy.
Frequently Asked Questions
What is a temporary buydown?
A lump sum funded up front and held in escrow that covers the difference between a reduced payment and the full note payment for the first years of the loan. A 2-1 buydown lowers the rate by two points in the first year and one point in the second before the note rate takes over; a 3-2-1 runs the same idea across three years.
Who pays for it?
Usually the seller or the builder, as a concession negotiated into the contract and deposited at closing. A buyer can fund one too, though that rarely makes sense when the same cash could go toward the down payment or a permanent rate reduction instead.
Is a buydown better than a price cut?
It depends on how long you keep the loan. A buydown concentrates all of its value in the first years, so it wins when your budget is tightest at the start. A price reduction lowers the loan for the entire term and lowers your Florida property tax basis with it, so it wins over a long hold. The calculator puts the same dollar amount into both columns.
What happens when the buydown ends?
You pay the full note payment, which was always the real payment. Lenders qualify you at the note rate for precisely that reason. If the budget only works during the subsidised years, the structure is hiding a problem rather than solving one.
Do the escrowed funds refund if I sell or refinance early?
The unused portion is generally applied to the loan rather than lost, but the treatment varies by program. Get it in writing from your lender before closing rather than assuming, because the amount involved is not small.
Does a buydown change my interest rate?
No. The note rate stays whatever you locked; the buydown only subsidises the payment temporarily. With benchmark 30-year rates near 6.6-6.7% in mid-2026, a buydown makes the first years feel like a lower-rate market without changing the loan you actually signed.