How to Use Our Buydown Calculator

How to Use Our Buydown Calculator

Mortgage calculators are a fast and easy way to learn about what your potential mortgage would look like. Use our Buydown Calculator to understand how different temporary and permanent rate buydowns can affect your monthly mortgage payments.

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There are multiple types of buydowns. With a permanent buydown, your interest rate is lowered for the entire term of the loan. A temporary buydown offers a reduction in mortgage rates for a set amount of time, which can help lower the initial payments of your loan, increasing affordability for homebuyers. After the temporary buydown period has ended, your mortgage will return to its permanent rate, also called the note rate.

Unlike Adjustable-Rate Mortgages (ARM), which offer a set rate for an initial period and then adjust every year, temporary buydowns provide you with certainty on your current and future interest rate for your loan.

Temporary buydown programs are structured so that the seller, builder, borrower or a third-party is paying the interest on the loan for the first few years of the agreement. That lump sum of money goes into an escrow account which is paid to the lender. If you choose to refinance, the remaining buydown money that was put aside belongs to the borrower and would be applied to the principal pay off. 


1/0 Buydown: This type of buydown lowers your interest rate by 1% for the first year of the loan.

1/1 Buydown: This program reduces your interest rate by 1% for the first and second year of the loan term.

2/1 Buydown: This buydown scenario would lower your interest rate by 2% for the first year of the loan, and by 1% for the second year of the loan.

3/2/1 Buydown: This temporary buydown lowers the interest rate on your mortgage by 3% for the first year, 2% the second year, and 1% the third year.

In all temporary buydown situations, once the buydown period is over, your interest rate will revert to the note rate.


Using our buydown calculator is simple. Start by adjusting the Loan Amount, Loan Term and Interest Rate to learn more about your estimated payment in each buydown scenario. Let’s do an in-depth look at each of the calculator fields:

Loan Amount: For a lender to determine your maximum loan amount, they will consider your debt-to-income ratio, credit score, credit and employment history, and your down payment.

Loan Term: You can adjust the term, or length, of your potential loan by choosing a 30-year fixed, 20-year fixed, or 15-year fixed. 30-year fixed mortgages are the most common loan term, offering lower monthly payments that can help new homebuyers afford their dream home. A 15-year fixed loan term will cost more monthly but can help save money on interest over the long run.

Interest Rate: Your interest rate is affected by a variety of factors, including the type of loan, the total amount, your down payment, the current financial market, and more. If you haven’t been Pre-Approved, you can use our pre-set estimated interest rate to help estimate your expenses.

Grey Colored Boxes: The grey boxes display your monthly payment at the permanent rate, or the note rate, with no buydown applied.

Green Colored Boxes: The green boxes display how the buydown would affect your monthly payment and rate.

Red Colored Boxes: The red boxes display the total cost to secure the buydown.


Yes! We’ve developed five unique mortgage calculators for you to use, including the Buydown Calculator, a standard Mortgage Calculator, a Refinance Calculator, a Debt-to-Income Calculator, and a VA calculator. You can check these out on our Calculators page. Once you have a good grasp on these numbers, you’ll be able to estimate how much money you need to have each month for a mortgage payment.

Are you ready to learn more? Get in touch with one of our mortgage professionals to begin your homebuying journey today! Wherever you’re at in the process, we’re here to help you.

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Why Choose FBC Mortgage?

FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.

Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.

All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2023.