Buydown Calculator
Buydowns reduce your mortgage rate temporarily or permanently. Compare 2-1, 1-0, and 3-2-1 temporary buydowns against discount points — and see exactly who pays what, when, and how much you save.
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Book a ConsultationHow Buydowns Work
A buydown is an upfront payment that reduces your mortgage rate for a set period (temporary) or for the life of the loan (permanent). Here is what you need to know.
2-1 Buydown: The Most Popular Strategy Right Now
With a 2-1 buydown, your rate is reduced by 2% in year one and 1% in year two. Starting year three, you pay the full note rate. The cost is funded upfront — usually by the seller as a concession. You qualify at the full note rate, not the reduced rate.
Seller Concessions: How to Ask the Seller to Pay
In many markets, sellers are willing to contribute toward closing costs. Instead of a price reduction (which lowers appraised value and barely changes your payment), ask the seller to fund a buydown. It costs them the same but saves you real money every month.
Buydown vs. Discount Points: Which Saves More?
Temporary buydowns give you big savings in the early years but cost more upfront and eventually expire. Discount points permanently reduce your rate but save less per month. If you plan to sell or refinance within 5-7 years, a temporary buydown often wins. If you are staying long-term, points may be the better play.
When a Buydown Makes Sense (and When It Does Not)
Buydowns make the most sense when rates are elevated and you expect them to drop, when sellers are offering concessions, or when you need lower payments now but expect income to grow. They make less sense if you are already stretching your budget at the full note rate — remember, you must qualify at that higher payment.
Buydown Negotiation Strategy
Instead of asking a seller for a price reduction, ask for a seller-funded buydown. Here is why: a $10,000 price cut on a $300,000 home saves you about $55/month. But $10,000 toward a 2-1 buydown could save you $300+/month in year one and $150+/month in year two.
The seller pays the same amount either way. But the buydown puts real dollars back in your pocket during the most expensive years of homeownership — when you are buying furniture, making repairs, and adjusting to a new budget.
A loan officer can help you structure the offer so the buydown is part of the purchase contract. This is a common, well-established strategy — not a loophole.
Want Help Structuring a Buydown?
A loan officer in the AMLO network can model the exact buydown scenario for your situation, show you how to negotiate seller concessions, and help you decide between temporary and permanent options.
This calculator is for educational purposes only. Buydown costs, availability, and terms vary by lender, loan program, and investor guidelines. Not all loan programs allow all buydown types. Borrowers must qualify at the full note rate for temporary buydowns. Discount point pricing (rate reduction per point) varies by lender and market conditions. AMLO is an independent education platform and does not originate, fund, or service mortgage loans. Contact a licensed mortgage professional for pricing specific to your situation.