USFinNexus

Reviewed September 12, 2026 · Educational estimate

Temporary Buydown Calculator (2-1, 3-2-1 & 1-0)

Quick answer: A temporary buydown lowers the payment for early years while the loan keeps its full note rate. Model the subsidy and the payment you must qualify for.

Year 1 rate

4.750%

P&I $2,087/mo

Year 2 rate

5.750%

P&I $2,334/mo

After buydown

$2,594/mo

Estimated subsidy $9,215

Important: Qualification is generally evaluated at the note rate, not the temporary payment. Confirm program rules, seller credits and servicing terms.

Temporary vs. permanent rate buydowns

This calculator models temporary payment subsidies. A permanent discount-point purchase works differently; compare it in the Points Buy-Down Calculator.

How much must the seller or builder fund?

The estimated subsidy is the difference between the full-note payment and each temporary payment, multiplied by the number of months. Actual agreements can include taxes, insurance, escrow and program-specific rules.

Use the full payment for affordability

Compare the note-rate payment with the Mortgage Calculator, Affordability Calculator and Closing Cost Calculator.

Results are illustrative, exclude taxes, insurance and PMI, and are not a lender quote or approval decision.

Temporary Buydown FAQs

What is a 2-1 buydown?

A 2-1 buydown temporarily reduces the note rate by two percentage points in year one and one point in year two, then returns to the full note rate.

Who pays for a temporary buydown?

A seller, builder or other permitted party often funds the subsidy at closing, subject to the loan program and applicable contribution limits.

Do I qualify at the lower buydown rate?

Usually underwriting uses the full note rate or program-specific qualifying payment, not the temporary teaser payment. Confirm with the lender.

2-1 buydown vs buying points?

A temporary buydown subsidizes early payments; discount points permanently reduce the note rate. Compare cash cost, break-even timing and how long you expect to keep the loan.

What happens to unused funds if I refinance?

The agreement and servicer rules control. Ask for written treatment of any remaining subsidy before assuming it becomes cash to you.

Continue your financial research

Use these closely related USFinNexus guides and tools to plan your next step.

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Illustrative comparison scenarios

2-1 temporary buydown example: $300,000, 30 years, 7% note rate. Subsidy supports payments; qualification and contract obligations use program rules.
PeriodPayment-support rateMonthly P&I
Year 15%$1,610
Year 26%$1,799
Year 37%$1,996
Year 47%$1,996
Year 5 onward7%$1,996

Educational scenarios, not quotes, approvals, investment forecasts or tax advice. See methodology and limitations.