Buydown Calculator

Use our Buydown Calculator to quickly estimate how a temporary interest rate buydown can reduce your buyer’s monthly payment during the first years of homeownership. This tool is perfect for comparing financing scenarios and helping buyers understand the impact of a seller-funded concession.

A temporary buydown can make a home more affordable, improve cash flow during the first few years, and help buyers feel more comfortable purchasing in today’s interest rate environment.

Reviewed by Susan Pryor, Licensed Mortgage Loan Originator, NMLS #157369

Base Monthly P&I (Full Rate)
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Principal & Interest only. Taxes, insurance, and other costs are not included.

Who Can Pay for a Buydown?

A temporary buydown doesn’t have to come out of the buyer’s pocket. Depending on the loan option and transaction structure, the funds may be provided by:

  • The home seller (the most common option)
  • The builder or developer as a sales incentive
  • The lender, through promotional pricing or credits (when available)
  • The buyer, if they choose to invest in lower initial payments
  • Interested third parties, where permitted by loan guidelines (such as employer or approved assistance programs)

Great Uses for a Buydown

A temporary buydown can be an excellent strategy when:

  • A home has been on the market longer than expected.
  • A seller prefers to offer a concession instead of reducing the sales price.
  • A builder wants to increase affordability without lowering base prices.
  • Buyers expect their income to increase over the next few years.
  • Buyers want lower initial payments while waiting for a future refinance opportunity.
  • An agent needs another negotiating tool to help get a transaction under contract.

Realtor Tip

Instead of asking, “Should we lower the price?” consider asking, “Would a temporary buydown create more value for the buyer?” In many cases, a seller concession used for a buydown can have a greater impact on monthly affordability than an equivalent reduction in the purchase price.

Disclaimer

Results are estimates for illustration purposes only and do not constitute a loan approval or commitment to lend. Buydown eligibility, seller concessions, and allowable contributions vary by loan option, investor guidelines, and transaction specifics. Contact our team for a personalized payment analysis and to determine the best financing strategy for your client.