3-2-1 Buydown Calculator

Run your own numbers

Enter a loan amount, the note rate you are considering, the term, and your yearly property tax and homeowners insurance. The calculator amortises the loan at the note rate and at each bought-down rate, shows the payment for every year of the buydown, and totals the buydown fee that would have to be deposited at closing. If a seller or builder is contributing, set the third-party contribution to see how much of that fee their concession covers.

If the calculator does not load, open it in its own tab (its figures are illustrative estimates only, not an offer or a quote), or ask us for the numbers on a real quote.

Every figure this calculator shows is an illustrative estimate computed in your browser from the numbers you type in. The pre-filled values are placeholders, not our pricing, and nothing here is an offer, a rate quote, an approval, or a commitment to lend. It does not compute an annual percentage rate: where a buydown is reflected in the credit contract, Regulation Z requires disclosure with a composite APR, which only your Loan Estimate for an actual file will show. Taxes and insurance are the yearly amounts you enter, divided by twelve. Equal Housing Opportunity. Valley West Mortgage, NMLS #65506.

How much does a 3-2-1 buydown cost?

A buydown is money paid up front to lower your rate for the first years of the loan. A 3-2-1 buydown costs the total of the payment savings it gives you in the first three years.

That money is paid once, at closing, and held in an account. Each month, the account covers the gap between your lower payment and your full payment.

Example only, not a quote. Take a $350,000 loan over 30 years with a fixed rate of 6%. This is your note rate, which is the rate written on your loan papers. This example does not show your annual percentage rate. Only your Loan Estimate (the form a lender gives you after you apply) shows the composite APR.

Year one: 3%. Year two: 4%. Year three: 5%. From year four on, you pay the full 6%.

The upfront cost comes to about $15,238. That is about 4.4% of the loan. A 2-1 buydown on the same loan costs about $7,764, or about 2.2%.

The 3-2-1 costs about twice as much. It lowers the rate further, and for one more year.

A seller or builder often pays this cost as part of the deal. Each loan program sets its own limit on seller-paid costs, and the rules differ by program. Ask us what yours allows.

To see the cost on your own loan, type your numbers into the calculator above. To learn how the payment steps up each year, read our guide to how a 3-2-1 buydown works.