Temporary Mortgage Buydown Calculator
Estimate your payment savings with a 2-1 or other interest rate buydown
| Year | Rate | Full Monthly Payment | Monthly Payment w/ Buydown | Monthly Savings | Annual Savings |
|---|
Should You Use a Temporary Mortgage Buydown?
With rising interest rates, many Ohio homebuyers are looking for creative ways to lower their monthly payment without committing to risky loan structures. One option gaining traction in Mason, Maineville, and across the state is the temporary mortgage buydown, a seller-paid strategy that offers real savings in the early years of your mortgage.
This page explains how it works, who it helps, and when it makes sense. And with the mortgage buydown calculator above, you can instantly see how much a 2-1 or 3-2-1 buydown could save you.
What Is a Temporary Mortgage Buydown?
A temporary buydown mortgage is a financing strategy where the interest rate is reduced for the first few years of the loan. The most common types are:
- 2-1 Buydown: Your interest rate is reduced by 2% in year one and 1% in year two, returning to the full rate in year three.
- 3-2-1 Buydown: A three-year ramp-up with reductions of 3%, 2%, and 1% before reaching the full rate in year four.
The cost of the buydown is paid upfront, often by the seller or builder, and acts as a prepaid interest subsidy. You get lower monthly payments early on without changing the total loan amount or risking a future rate hike like with an ARM.
How Does a Temporary Buydown Work?
Let’s say you’re approved for a $350,000 mortgage at 6.5% on a 30-year term with a 2-1 buydown. Your rate for the first year would be 4.5%, then 5.5% in year two, and 6.5% from year three onward.
That structure could save you thousands in the first 24 months.
To qualify:
- Buyers must qualify at the full interest rate per Fannie Mae guidelines.
- The loan must typically be a fixed-rate conventional loan
- The buydown is often negotiated into the purchase contract
Want to see how this plays out? Scroll up to the calculator and choose your buydown type, loan amount, interest rate, and term. You’ll get a year-by-year breakdown of your payment reduction and total savings over the buydown period.
Temporary vs. Permanent Buydown
A temporary buydown offers short-term payment relief. A permanent buydown involves paying extra points at closing to permanently reduce your rate.
| FEATURE | TEMPORARY BUYDOWN | PERMANENT BUYDOWN |
|---|---|---|
| Lower payments in early year | ✅ Yes | ❌ No (flat payments) |
| Long-term savings | ❌ Limited | ✅ Potentially significant |
| Who pays | ✅ Often seller | ❌ Typically buyer |
| Good if refinancing soon | ✅ Yes | ❌ Not ideal |
Use the calculator above to compare real-world mortgage buydown scenarios based on your loan size and term. Want to compare total costs? Try the Home Purchase Calculator to evaluate overall affordability.
Who Pays for the Buydown?
In most cases, the seller or builder covers the cost of the temporary buydown as part of the purchase negotiation. This is especially common when:
- A home has been on the market longer than expected
- Sellers are offering incentives instead of price cuts
- Builders want to make homes more affordable despite higher rates
Can the seller pay for the buydown? Yes — and many do, especially in today’s market. Concessions must follow Freddie Mac seller concession rules. Let’s talk about your numbers first, and I’ll help coordinate with your Realtor to structure a winning offer.
Is a Mortgage Buydown Worth It?
If you plan to refinance in the next 2–3 years, or you simply want to ease into your new mortgage payment while managing cash flow, a temporary interest rate buydown could make excellent financial sense.
In Ohio, many sellers are open to offering buydown credits to attract serious buyers without lowering the sale price. It’s a strategy that works especially well when:
- You expect to refinance once rates drop
- You need room in your budget for home improvements
- You want financial breathing room in year one or two
The calculator above shows how much you could save in real dollars. Not sure if now is the right time to buy? Our Buy Now vs Wait Calculator can help you model both scenarios.
Try the Temporary Mortgage Buydown Calculator
This free tool estimates your total interest savings, shows a year-by-year payment breakdown, and helps you compare the actual cost of your loan under a temporary buydown structure.
Simply enter:
- Loan amount
- Interest rate
- Loan term
- Buydown type (2-1, 3-2-1)
You’ll see how much the seller would need to contribute and how your monthly payments change over time.
Why Ohio Buyers Are Using Buydowns More
Many Mason and Maineville homebuyers are choosing temporary buydowns as a way to stay competitive while interest rates remain elevated. Sellers are more open to negotiating rate relief than reducing price — and that flexibility gives you options.
If you’re buying in Ohio and want to explore every advantage, let’s look at your custom numbers and see if a buydown fits.
Temporary Mortgage Buydown Frequently Asked Questions
Next Steps: Get Your Custom Scenario
Want to know if a 2-1 buydown or 3-2-1 buydown makes sense for your situation?
Let’s run the numbers together and explore all your options — including how to ask the seller to cover the cost.
Contact me here to get your custom scenario
You can explore all the tools in my Mortgage Calculators hub.