Mortgage Rate Buydown Calculator
A seller credit can lower your rate for a while or your price forever. This compares the two.
What This Calculator Does
Prices a temporary buydown — usually a 2-1 or a 3-2-1 — showing the reduced payment in each subsidised year, the full note payment waiting afterwards, and the total escrow a seller or builder must fund to create it. The same money is then run as a straight price reduction so the better outcome is visible.
Who Is This For
Buyers offered a builder or seller credit in Miami and South Florida, negotiators choosing between a rate buydown and a lower price, and anyone who wants to see the payment once the subsidy expires.
How It Works
Enter the loan amount, the note rate, and the buydown structure on offer. The calculator shows each year's payment, the escrow the credit must fund, and the equivalent price reduction that money would buy instead.
Frequently Asked Questions
How does a temporary buydown work?
A lump sum funded up front and held in escrow, covering the difference between a reduced payment and the full note payment across the loan's opening years. A 2-1 buydown cuts the rate by two points in year one and one point in year two before the note rate takes over; a 3-2-1 spreads the same idea across three years.
Who funds it?
Typically the seller or the builder, as a concession negotiated into the contract and deposited at closing. A buyer can fund one, though that rarely makes sense when the same cash could go toward the down payment or a permanent rate reduction instead.
Buydown or price cut?
It turns on how long you keep the loan. A buydown concentrates its value in the first years, so it wins when the budget is tightest early. 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 identical dollar amount into both columns.
What happens when the buydown runs out?
You pay the full note payment, which was the real payment all along. Lenders qualify you at the note rate for exactly that reason. If the budget only works during the subsidised years, the structure is concealing a problem rather than solving one.
Are the escrowed funds refunded on an early exit?
The unused portion is generally applied to the loan rather than forfeited, though treatment varies by program. Get it in writing from the lender before closing instead of assuming, because the sums involved are not trivial.
Is my actual rate any lower?
No. The note rate remains whatever you locked; the buydown subsidises the payment temporarily and nothing more. With benchmark 30-year rates near 6.6-6.7% in mid-2026, it makes the early years feel like a cheaper market without altering the loan you signed.