2-1 Buydown Calculator
Calculate the cost and monthly payment savings of a 2-1 temporary buydown
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Create Your Own ComparisonFrequently Asked Questions
A 2-1 buydown is a temporary interest rate reduction where the rate is 2% lower than the note rate in year one, 1% lower in year two, and returns to the full note rate from year three onward.
Typically the seller, builder, or lender pays for the buydown as a concession. The funds are placed in an escrow account and used to subsidize the borrower's payments.
The cost equals the sum of the payment differences over the first two years. For a $400,000 loan at 7%, a 2-1 buydown typically costs around $8,000-$12,000.
A 2-1 buydown can be worth it if you expect rates to drop and plan to refinance, or if you need lower initial payments to qualify for the loan.