3-2-1 Interest Rate Buydown
Looking for a way to ease into homeownership with lower monthly payments in the early years of your loan? A rate buydown may be a smart strategy.
A temporary interest rate buydown allows you to reduce your interest rate for the first one to several years of your mortgage. This option can make initial payments more manageable, especially if you’re anticipating income growth or making use of seller-paid concessions.
With a temporary buydown, a portion of your mortgage interest is prepaid upfront—often by a seller or builder—to reduce your monthly payment for the first few years of your loan. After the buydown period ends, your payment adjusts to the full amount based on the original loan rate.
While these programs help lower costs early on, you’ll still need to qualify for the loan based on the full monthly payment. That ensures long-term affordability while giving you some financial breathing room at the start.
Check out how much you can save using our Rate Buydown Mortgage Calculator…
Our mortgage calculators are for demonstration purposes only and may not reflect actual numbers for your specific mortgage. Contact us and we will walk you through the best possible mortgage scenario for your specific needs!
The total buydown fee for this loan is
$
The buydown fee is the cost of lowering your interest rate for the first few years of your loan. This is usually paid by the seller and passed on to the buyer as savings in the form of a lower interest rate.
Yearly Mortgage payments breakdown:
Year 1
$1,740.83
Monthly Payment
Buyer Savings:
Year 1
3.25%
Original Payment
$2,462.87
New Payment
$1,740.83
Monthly Savings
$722.04
Annual Savings
$8,664.48
3/2/1 Buydown Cost (Seller Paid)
$17,654.52
Estimated Taxes & Insurance
Property taxes are generally estimated to be 1.2% of the home's value, but may vary based on your location. Annual homeowners insurance is roughly 0.35% of the home's value but can change based on insurer. Your loan specialist can help you determine property tax and insurance rates in your area.
Estimated Buyer Savings
$
Loan amount
$
Down payment
$
Base Interest rate
Loan term
Taxes & insurance included?
Property tax
Homeowner's insurance
$
HOA dues
$
Payment Breakdown By Year
Amortization
Amortization Schedule Breakdown
Our detailed amortization schedule breaks down your mortgage payments, showing how they are split between interest and principal over the life of your loan.
Note: The actual monthly payment may be higher than what is shown here, as this schedule does not account for variable costs such as property taxes and home insurance, which are often included in your total mortgage payment.
- Principal payments: $ (the amount borrowed)
- Interest payments: $ (the cost of borrowing)
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