Temporary Buydown Calculator
Curious how a builder- or seller-paid temporary buydown could trim your payment for one to three years? Enter a loan amount, note rate, and term to estimate the payment during the buydown years, what you save each month and year, and the approximate subsidy cost. CapFi Lending helps Central Texas buyers run these numbers before an offer goes in.
Estimate your buydown
See how the payment steps during the temporary buydown and what it looks like once the note-rate payment kicks back in.
| Year | Interest rate | Monthly payment | Monthly savings | Annual savings |
|---|
Payments are principal & interest only (taxes, insurance, and MI not included). Reduced-year payments use the same original loan amount and full term at a temporary payment-equivalent rate — the note rate itself does not change; an escrow subsidy covers the gap. Not a re-amortization of remaining balance. P&I only (taxes, insurance, HOA, and MI excluded).
What is a temporary buydown?
A temporary mortgage buydown lowers the rate used to figure your payment for a short stretch—usually one to three years—without permanently changing the note rate. After that window, you pay the full note-rate payment for the rest of the loan.
That is different from buying discount points, which can lower the rate for the life of the loan. CapFi’s seller-paid buydown page pairs with this temporary mortgage buydown calculator when you want the schedule in dollars.
How a buydown works
Funds (often a seller or builder credit) go into an escrow account at closing. Each month during the buydown, that account covers the gap between the reduced payment and the full note-rate payment. When the buydown ends, the reduced schedule stops and the regular payment begins.
How much it costs
The cost is essentially the sum of those monthly gaps over the buydown years. This calculator estimates that total from the payment difference at each reduced rate versus the note-rate payment.
Who typically funds it
Builders and sellers commonly contribute toward a temporary buydown, within each loan program’s credit limits and investor rules. Availability depends on the product and guidelines—your CapFi loan officer can confirm what fits your file.
The four options
Temporary buydown vs discount points
| Temporary buydown | Discount points | |
|---|---|---|
| How long payments are lower | First 1–3 years, by structure | Rate cut can last the whole loan |
| Note rate permanently lower? | No — returns to note rate after the window | Yes, if points buy a lasting rate drop |
| Who usually pays | Often seller/builder credit into escrow | Often borrower at closing |
| Best fit | Want breathing room early, or expect income/refi timing to help | Plan to keep the loan long and want lifetime interest savings |
When a temporary buydown can make sense
Lower payments in the first years matter, eligible seller or builder funds are on the table, and you understand you’ll still typically qualify at the full note rate. Compare it with a closing-cost credit or a permanent points buy-down before you lock the strategy into an offer.
After the buydown ends
The temporary reduction stops. Your payment becomes the full note-rate principal-and-interest payment (taxes, insurance, and MI still extra). The note rate itself never “stepped up”—only the payment calculation rate during the subsidy window did.
Temporary Buydown Questions
Does a temporary buydown change the note rate?
No. The note rate stays the same. Escrow funds cover the gap between your reduced payment and the full note-rate payment during the buydown.
What happens after the buydown ends?
You pay the full note-rate principal-and-interest payment. Taxes, insurance and mortgage insurance are extra.
Who typically funds a temporary buydown?
Builders and sellers commonly contribute, within loan-program credit limits and investor rules. Availability depends on the product and guidelines.
Do these estimates include taxes and insurance?
No. The calculator estimates principal and interest only. Taxes, insurance and mortgage insurance are not included, so your actual obligation will be higher.