By Mike Baker, Mortgage Loan Originator · The Rate Shop · Serving Kansas & Missouri
THE RATE SHOP · KANSAS & MISSOURI
Temporary Buydown Calculator
What if the seller helped lower your mortgage payment for the first few years?
Explore a 3-2-1, 2-1, or 1-1 buydown. See your early payment relief—and the seller or builder contribution you could negotiate to make it happen.
Run your numbers ↓ · How does it work?YOUR FIRST-YEAR MONTHLY PAYMENT RELIEF
—less per month for the first 12 payments
SELLER / BUILDER CONTRIBUTION TO DISCUSS
—Estimated amount set aside at closing to cover all of this plan’s payment reductions.
Or call/text Mike: 913-213-3335
SEE THE WHOLE PICTURE
Your payments, year by year
| When | Payment based on | Principal & interest you pay | Payment with entered extras | Monthly relief |
|---|
The “payment based on” rate explains the temporary discount; your actual fixed loan rate does not change. Taxes, insurance, mortgage insurance, and HOA are held constant here so you can isolate the buydown’s effect. Those costs can change over time.
Compare all three options
Same loan. Same full rate. Different ways to ease into the payment.
The contribution shown funds the payment relief only—not your down payment or other closing costs. Mike can help your Realtor structure the full request.
THE PLAIN-ENGLISH VERSION
A head start on your payments—not a different mortgage.
A temporary buydown is a way to reduce the amount you pay during the first one to three years of a mortgage. Think of it as a payment-help account funded at closing. Each month, you pay your reduced portion and that account covers the difference.
Your loan still has its original fixed interest rate. When the help ends, you make the full payment. That is why this calculator shows both numbers together.
3-2-1 buydown
Payments based on a rate 3 percentage points lower in year one, 2 lower in year two, and 1 lower in year three. Full payment begins in year four.
2-1 buydown
Payments based on a rate 2 percentage points lower in year one and 1 lower in year two. Full payment begins in year three.
1-1 buydown
Payments based on a rate 1 percentage point lower for both of the first two years. Full payment begins in year three. This is different from a 1-0, which lasts just one year.
A DIFFERENT WAY TO NEGOTIATE
Ask for payment help—not just a price reduction.
When a seller or builder is open to concessions, a temporary buydown can be a powerful part of your offer. Instead of putting every negotiated dollar toward a lower price, you can ask them to fund lower payments during your first years in the home.
With a fully seller- or builder-funded buydown, that contribution is paid by them at closing—not added to your loan balance or charged to you as a separate buydown fee. You still plan for your down payment and other closing costs. Mike and your Realtor can work together on a request that fits the home, your loan, and the seller’s goals.
“Could we ask the seller to contribute toward a temporary buydown so my first payments are lower?”
That is a great conversation to have before writing your offer. We can compare a price reduction, closing-cost help, and a buydown side by side, then focus on what gives you the most value.
Help me build my offer strategy →How to use this calculator
- Choose Conventional, FHA, or VA. Enter your purchase price and down payment in dollars or percent. The two down payment boxes stay linked. Starting down payments are 5% Conventional, 3.5% FHA, and 0% VA; you can adjust them.
- Check your loan amount and enter your full rate. The calculator subtracts your down payment, then adds FHA upfront mortgage insurance or the applicable VA funding fee. For VA, choose first use, subsequent use, or exempt. Choose your repayment term.
- Choose a buydown. Start with 2-1, then compare 3-2-1 or 1-1. All comparisons use the total loan amount, including any financed upfront fee.
- Add your other monthly costs. Enter estimated taxes, homeowners insurance, monthly mortgage insurance for Conventional or FHA, and HOA. VA has no monthly mortgage insurance.
- Bring the contribution figure to Mike. We will explore how it could fit your offer and confirm which options your loan supports.
The calculator compares the normal fixed-rate payment with payments calculated using each year’s reduced rate. Each monthly difference is multiplied by 12 and added together to estimate the seller or builder contribution. The same total loan amount and full term are used for every comparison.
Upfront fee references: VA funding fee chart and HUD upfront mortgage insurance. FHA upfront mortgage insurance is 1.75% of the base loan. VA fees depend on your down payment, prior use, and exemption status. These upfront fees are separate from the seller-funded buydown contribution.
How much does a 2-1 buydown cost? A simple example.
On a $380,000 loan at a 6.50% fixed rate for 30 years, the regular principal-and-interest payment is $2,401.86 per month. A 2-1 buydown brings your portion to $1,925.40 in year one and $2,157.60 in year two. The full payment begins in year three.
That is $476.46 less per month in the first year and $244.26 less in the second. The estimated seller or builder contribution is $8,648.64: 12 months of each payment difference added together.
This fixed example uses an illustrative rate and principal and interest only; taxes, insurance, mortgage insurance, and HOA are extra. Change the calculator above to explore your own numbers.
Planning a buydown for a home in Kansas or Missouri
Whether you are comparing a Kansas City resale home or a builder's new home, start with two numbers: the full monthly payment you are comfortable with and the seller or builder credit available to negotiate. Mike can help you and your Realtor compare using that credit for early payment relief, closing costs, or a lower long-term rate.
Use the mortgage payment calculator with taxes, insurance, PMI, and HOA to build your complete budget. Already have an offer from a lender or builder? Bring it to Mike for a complimentary Loan Estimate second opinion and side-by-side comparison. We will look at the full rate, fees, credits, and payment—not just the first-year number.
Temporary buydown questions homebuyers ask
What is the difference between a temporary buydown and buying discount points?
A temporary buydown uses money set aside at closing to help cover your payments for the first few years; your actual loan rate stays the same. Discount points are an upfront cost used to lower the loan's interest rate. Mike can compare the early payment help with the longer-term benefit of points using your actual offers.
Who pays for a temporary buydown?
This calculator focuses on negotiating seller or builder funding. If they agree to cover the full amount, they supply the money at closing. Mike checks how that fits the available seller-credit allowance and any other credits you are using.
Can a buydown help me qualify for a more expensive home?
Its main benefit is breathing room in your early budget. Qualification is based on the full payment, so we start with a home you can comfortably carry after the temporary help ends. Then we explore how much early payment relief we can build into your offer.
Is this better than asking for a lower price?
It depends on your priority. A lower price reduces what you borrow; a buydown concentrates the benefit into the first few years. Bring Mike the home price and any seller incentive, and we can compare both approaches in dollars.
What if I refinance or sell before the buydown ends?
We can review your options when the time comes. The buydown agreement explains how unused funds are handled at payoff, often by reducing the payoff amount. Plan around the full payment today; a future refinance can be another opportunity if it makes sense then.
Can I use this with a VA, FHA, or conventional loan?
Temporary buydowns are available with many conventional, FHA, and VA loan programs. The schedules and funding choices vary by program and lender. Tell Mike which loan you are considering and we will match the strategy to the options available for your purchase.
Let’s turn the numbers into an offer strategy.
Buying in Kansas or Missouri? Bring Mike the home you like, the payment you want to explore, and any seller or builder incentive. We will talk through how to put those pieces together.
Talk through my buydown options →