Estimate the buydown path
Temporary buydown math estimates principal and interest only. Taxes, insurance, HOA dues, PMI, and escrow changes are excluded.
| Period | Rate used for payment | Monthly P&I | Monthly savings | Months | Subsidy needed |
|---|
The subsidy estimate equals the monthly difference between the note-rate payment and the temporary reduced-rate payment for the buydown months.
Methodology notes
Payment math
Each payment uses the standard fixed-rate amortization formula with the original loan amount and term. Temporary rates affect the borrower payment, not the note rate.
Subsidy account
The estimated subsidy is the sum of note-payment minus reduced-payment differences over year one and, when applicable, year two.
Credit tradeoff
Available credit is compared with the subsidy. Any surplus may be more useful for closing costs or permanent points, subject to lender and program limits.
Results are estimates for educational purposes only and are not financial advice. Confirm buydown eligibility, credit caps, qualification rules, and unused subsidy handling with your lender. See full disclosure.
Mortgage buydown FAQ
What does 2-1 mean?
A 2-1 buydown commonly lowers the first-year payment as if the rate were two percentage points lower, then one point lower in year two, before returning to the note-rate payment.
Is the subsidy a discount?
Usually no. It is an upfront fund that covers the scheduled payment difference. The note-rate loan still amortizes under the lender's buydown agreement.
What if I sell early?
Unused subsidy treatment depends on the agreement. Some structures credit it to principal or payoff; others follow lender-specific rules.