Every way to buy the rate down, side by side. A temporary buydown makes the first year or two cheap and then steps back up; a permanent one costs more and lasts the life of the loan. Pick a column to see what it costs and when it ends.
| Year 1months 1–12 | $3,6137.15% | $3,2596.15% | $3,2596.15% | $2,9215.15% | $2,6014.15% | $3,5246.90% |
|---|---|---|---|---|---|---|
| Year 2months 13–24 | $3,6137.15% | $3,6137.15% | $3,2596.15% | $3,2596.15% | $2,9215.15% | $3,5246.90% |
| Year 3months 25–36 | $3,6137.15% | $3,6137.15% | $3,6137.15% | $3,6137.15% | $3,2596.15% | $3,5246.90% |
| Remaining termyear 4 onward | $3,6137.15% | $3,6137.15% | $3,6137.15% | $3,6137.15% | $3,6137.15% | $3,5246.90% |
| Cost at closingwhat the buydown is worth | — | $4,249 | $8,497 | $12,555 | $24,708 | $5,350 |
| Out of your pocketseller / builder pays | — | $0 | $0 | $0 | $0 | $0 |
| Payment steps upback to 7.15% | never | month 13 | month 25 | month 25 | month 37 | never |
That is 7.15% minus 2%, then 1%, on the same $535,000 loan. The $12,555 subsidy is the seller's money, so every dollar of it is yours to keep. What matters is whether you can carry $3,613/mo when it ends.
By then the subsidy is fully used — all $12,555 of it went into your payments, and you've been paying the full $3,613 since month 25. Nothing is left to refund.
| Year | Rate | You save / mo | Subsidy |
|---|---|---|---|
| Year 1 | 5.15% | $692 | $8,306 |
| Year 2 | 6.15% | $354 | $4,249 |
| Total | $12,555 |
Funded into a buydown escrow at closing and released month by month — the lender is paid in full the whole time. Paid by the seller or builder, so $0 out of your pocket.
A buydown changes the payment — your budget sets the price. Know your comfortable number first, then decide where the upfront cash works hardest.