US Temporary Mortgage Buydown Calculator

How this calculator works

A temporary buydown supplies part of the scheduled mortgage payment for a limited period. The underlying loan continues at its note rate; the borrower’s payment rises when the subsidy ends. Here a 2-1 comparison uses payments calculated at two percentage points below the note rate in year one and one point below in year two. A 1-0 comparison uses a one-point reduction for the first year only.

Formula and rules

Note payment = payment(P, note rate, original term). Temporary borrower payment = payment(P, note rate − reduction, original term). Subsidy = 12 × each year’s payment difference.

Assumptions and limitations

Twelve full monthly payments per subsidy year and a constant fully amortizing note-rate loan. No permanent interest-rate reduction, eligibility test, APR certification, escrow or seller-credit limit is inferred. The rate must support nonnegative discounted rates; actual subsidy account terms and funding are lender-specific.

Worked example

For $120,000 at a 2% note rate over 120 months, a 2-1 comparison uses a $1,000 year-one payment at 0%, a 1% comparison payment in year two, then the full 2% note payment. The subsidy is twelve times both annual payment differences.

Year-one borrower monthly payment

$1,000.00

Year-two borrower monthly payment

$1,051.25

Full note-rate monthly payment

$1,104.16

Total required temporary subsidy

$1,884.88

Official sources and review

Reviewed against the sources below on 2026-10-07. Rates are held in versioned rule modules. Versioned rules, official source review and year-specific calculation tests.

• CFPB: temporary buydown payment changes ↗

  Temporary payment support ends; note-rate payments and other escrow changes are separate.

Common questions