2-1 Buydown Calculator: Year-by-year payments on a temporary buydown, what it costs to fund, and how it compares with a permanent buydown. A temporary rate buydown. The buyer pays as if the rate were two points lower in year one and one point lower in year two, then the full note rate from year three. The difference for those two years is deposited up front, usually by the seller or a builder, and drawn down each month.
A temporary buydown lowers the payment for the first year or two while someone, usually the seller or builder, funds the difference up front. See the payments year by year, what it costs to fund, and how it stacks up against buying the rate down permanently.
Compare with a permanent buydown:
Loan amount $405,000 · full payment $2,627 P&I
| Year | Rate | Payment | Saving / mo | Saving / yr |
|---|---|---|---|---|
| Year 1 | 4.75% | $2,113 | $514 | $6,170 |
| Year 2 | 5.75% | $2,363 | $263 | $3,160 |
| After | 6.75% | $2,627 | — | — |
Cost to fund the 2-1 buydown
$9,330
Usually paid by the seller or builder as a concession and held in escrow. Program rules cap how much a seller can contribute; ask the loan originator.
Versus a permanent buydown
Payment at 6.25%
$2,494
Saving every month, for the life of the loan
$133
Cost in points
$7,088
The temporary buydown helps most when the buyer expects income to rise or to refinance within two years; the permanent one wins if they stay put. At these numbers the points pay for themselves in about 54 months.
Rates on this page are the ones you typed. This is arithmetic, not an offer to lend, not a quote and not advice; program rules, credit and the lender's pricing decide the real numbers. Ask a licensed loan originator for a Loan Estimate.
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Key facts
A 2-1 buydown lowers the rate by 2 points in year one and 1 point in year two, then returns to the note rate. Cost = 12 × (full payment − year-one payment) + 12 × (full payment − year-two payment), paid by the seller or builder into an escrow account.
About $9,104 funds the buydown. The buyer qualifies at the full 6.5% payment, and the unused escrow is credited if the loan is paid off early.
Usually the seller or builder, as a concession negotiated in the purchase contract, within the program’s limit on seller contributions. The money is deposited with the servicer at closing and released each month to make up the difference between the reduced payment and the full one. Buyers can also pay for a buydown themselves.
For the buyer’s first two years, a buydown lowers the payment far more than the same dollars off the price would; a $9,000 price cut lowers a 6.5% payment by roughly $57 a month, while a $9,000 buydown saves about $500 a month in year one. After year two the price cut is worth more. The calculator compares both.
Last reviewed September 8, 2026 by the EstatePass editorial team. Formulas and program limits are checked against the published rules; figures on this page are arithmetic, not market statistics.
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