Temporary Buydown Calculator

Background.

The practical question behind Temporary Buydown Calculator is whether you can compute the escrowed subsidy needed for a standard two-one temporary buydown. In this context, a temporary buydown leaves the note rate unchanged while a funded account covers the payment difference during the first two years. The calculator therefore applies “buydown fund = 12 × (note payment − year-one payment) + 12 × (note payment − year-two payment).”

The editable entries are loan principal, permanent note rate, amortization term, first-year rate reduction, second-year rate reduction. Use values from the document or measurement that governs this temporary buydown question; the defaults are only the worked fixture below. It is not a lower-rate loan, and taxes, insurance, mortgage insurance and the source-of-funds rules remain unchanged. That temporary buydown boundary is part of the answer, not a generic disclaimer.

Consumer Financial Protection Bureau, Loan Estimate explainer; rate, payment and closing-cost fields documents the convention or governing rule used here. The temporary buydown output is a transparent scenario under those facts: it does not manufacture an unentered market price, professional determination, carrier quote, legal eligibility finding or locally adopted code value.

What is temporary buydown calculator?

Temporary Buydown is the relationship behind this decision: a temporary buydown leaves the note rate unchanged while a funded account covers the payment difference during the first two years. On this page it means buydown fund = 12 × (note payment − year-one payment) + 12 × (note payment − year-two payment). It is not a lower-rate loan, and taxes, insurance, mortgage insurance and the source-of-funds rules remain unchanged; that is the line between the reported quantity and a broader mortgage analysis.

How to use this calculator.

1. 01Confirm that “buydown fund = 12 × (note payment − year-one payment) + 12 × (note payment − year-two payment)” matches the temporary buydown convention you need.
2. 02Replace the fixture values for loan principal, permanent note rate, amortization term, first-year rate reduction, second-year rate reduction with dated values from the governing record.
3. 03Keep all currencies, measurement units and time periods on the same basis before calculating.
4. 04Read first-year monthly payment together with this boundary: It is not a lower-rate loan, and taxes, insurance, mortgage insurance and the source-of-funds rules remain unchanged.

The formula.

The calculation uses buydown fund = 12 × (note payment − year-one payment) + 12 × (note payment − year-two payment). In this temporary buydown model, the entered terms are loan principal, permanent note rate, amortization term, first-year rate reduction, second-year rate reduction. A temporary buydown leaves the note rate unchanged while a funded account covers the payment difference during the first two years, which is why the relationship is presented under this name rather than as a universal alternative. It is not a lower-rate loan, and taxes, insurance, mortgage insurance and the source-of-funds rules remain unchanged. Calculations keep full decimal precision through the relationship and round only the returned display values.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Consumer Financial Protection Bureau, Loan Estimate explainer; rate, payment and closing-cost fields. Retrieved 2026-08-07. access: open unless marked otherwise.
2. [2]U.S. Consumer Financial Protection Bureau. What are discount points and lender credits?. Retrieved 2026-08-07. independence: primary; access: open.
3. [3]Fannie Mae. Single family selling guide. Retrieved 2026-08-07. independence: primary; access: open.