Mortgage Rate Buydown Calculator
Calculate the full cost and savings of a 2-1 or 3-2-1 mortgage rate buydown. See year-by-year payments, compare a buydown vs permanent discount points, and find out whether the seller should pay for it.
Year-by-year payment comparison — buydown vs standard full-rate loan on your $350,000 loan.
| Year | Rate | Monthly Payment | Annual Payment | Annual Savings | Cumul. Savings |
|---|---|---|---|---|---|
| Year 1 (Buydown) | 5.0% | $1,879 | $22,547 | +$5,396 | $5,396 |
| Year 2 (Buydown) | 6.0% | $2,098 | $25,181 | +$2,762 | $8,158 |
| Year 3 | 7.0% | $2,329 | $27,943 | - | $8,158 |
| Year 4 | 7.0% | $2,329 | $27,943 | - | $8,158 |
Complete interest cost comparison: buydown vs standard rate over 5, 10, and 30 years.
| Analysis Period | Without Buydown | With Buydown | Difference |
|---|---|---|---|
| 5 Years | $139,714 | $131,556 | +$8,158 |
| 10 Years | $279,427 | $271,269 | +$8,158 |
| 30 Years | $838,281 | $830,123 | +$8,158 |
How to Use This Rate Buydown Calculator
Enter your loan details and buydown type to see year-by-year payments and the full cost analysis.
Quick Calculator
Enter your Loan Amount, Original Rate (the note rate you'll pay after the buydown period ends), and select a Buydown Type (2-1, 3-2-1, or 1-0). The calculator shows your year 1 payment, total buydown cost, and monthly savings during each buydown year.
Advanced — Payment Schedule, Buydown vs Points, Seller Concession
The Payment Schedule tab shows a complete year-by-year table — rate, monthly payment, annual savings, and cumulative savings for each year. The Buydown vs Points tab compares your temporary buydown against permanent discount points that achieve the same initial rate reduction. The Seller Concession tab shows how to frame a buydown as a negotiation tool.
Professional — Full Cost Model, Break-Even Analysis, Investment Alternative
The Full Cost Model shows total payments with and without the buydown at 5, 10, and 30 years. Break-Even Analysis shows when the buydown cost is recouped. The Investment Alternative tab calculates whether you'd do better investing the buydown cost at market returns instead.
How Rate Buydowns Are Calculated
Year 1: Rate = Note Rate − 2%
Year 2: Rate = Note Rate − 1%
Year 3+: Rate = Note Rate (full)
Buydown Cost = (Full Payment − Year 1 Payment) × 12 + (Full Payment − Year 2 Payment) × 12
Example — $350,000 loan at 7.0% (2-1 buydown):
Year 1 rate: 5.0% → Payment: $1,879 (vs $2,329 full) → Annual savings: $5,400
Year 2 rate: 6.0% → Payment: $2,098 (vs $2,329 full) → Annual savings: $2,772
Total Buydown Cost = $5,400 + $2,772 = $8,172
Year 3+: Full rate 7.0% → Payment: $2,329/mo
Example: Builder-Funded 2-1 Buydown
David buys a new construction home in Phoenix — builder offers a 2-1 buydown
David is buying a $425,000 home with 10% down ($382,500 loan). The builder offers a 2-1 buydown at 7.5% note rate as an incentive.
| Loan Amount | $382,500 |
| Note Rate (Year 3+) | 7.50% |
| Year 1 Rate | 5.50% |
| Year 1 Payment | $2,171/mo |
| Year 2 Rate | 6.50% |
| Year 2 Payment | $2,417/mo |
| Full Rate Payment | $2,676/mo |
| Buydown Cost (Builder Pays) | $9,060 |
| Year 1 Savings | $505/month ($6,060/yr) |
| Year 2 Savings | $259/month ($3,108/yr) |
David saves $505/month in the first year — significant breathing room as he sets up the new home. The builder funds the buydown from profit margins. David should be prepared for the payment increase in year 3, and may choose to refinance if rates drop before then.