Utah temporary buydown calculator

A temporary buydown lowers your interest rate for the first one to three years of a fixed rate loan. Someone else pays for it at closing, most often the seller or a builder. That money sits in an account with the company that collects your payment. Each month it covers the gap between your full payment and the lower one. Your rate, your loan amount and your loan length never change. Once the money is used up, you pay the full payment.

Each number is how many points the rate drops for one year. A 3-2-1 takes 3 points off in year one, 2 in year two and 1 in year three. A 2-1 takes 2 points off, then 1. A 1-1 takes 1 point off for two years. A 1-0 takes 1 point off for one year. After that you pay the full rate. The calculator prices all four at once, and you can pick any of them.

The same way my lender buydown worksheet does it. For each buydown year, it finds the monthly principal and interest at the lower rate on the full loan and rounds it to the cent. It takes that from the payment at the full rate, rounds the gap to the cent and multiplies by 12. Add up the years and you have the amount the seller puts in at closing. The lender worksheet under the stair chart shows every line. Taxes, insurance, mortgage insurance and community fees are not part of it. A buydown only lowers the interest, so those lines stay the same every year.

Yes, it counts. The buydown and any closing costs the seller pays add up against one limit. On a conventional loan the limit is 3% of the price with less than 10% down, 6% with 10% or more down, and 9% with 25% or more down. FHA allows 6% at any down payment. The calculator reads these limits from the same file the other calculators use, and checks your whole ask against them. A limit is what the loan allows. It is not what a seller will agree to.

The two loans charge for mortgage insurance in different ways. Conventional mortgage insurance is set by your credit score and down payment, so it costs more as the score drops. FHA charges the same yearly rate at every score, plus an upfront fee rolled into the loan. With strong credit, conventional often has the lower payment. With lower scores, FHA often does. The Where the lines cross table shows where the two meet for your numbers. Conventional insurance ends once you owe 80% of the value. FHA insurance stays for the life of the loan with less than 10% down.

The full one. Lenders qualify you at the full rate, not the bought down rate. So the step up in year two or three is a payment the lender already decided you can carry. A buydown does not raise how much home you can buy. It makes the first years of that home easier.

You do not lose it. The money that is left goes toward paying off your loan, so it helps when you refinance or sell. The buydown agreement you sign at closing says exactly how it is used, so read it. The seller does not get it back.

It depends on how long you keep the loan. A price cut lowers every payment by a little for the whole loan. A buydown puts all the money into the first years. The price cut section below uses the same dollars both ways and shows how long the cut takes to catch up. Sellers often like the buydown because the sale price on record stays the same. Paying points to lower the rate for the whole loan is a third choice. Its price changes every day, so ask me for a live quote.

No. Both rates are recent average rates, and the date shows under the conventional rate. Your real rates depend on your credit, your down payment, the home and the day you lock. Change either rate to test your own. Call me and I will tell you yours.

Yes. The web address changes as you type, so you can bookmark it or send it to your agent before the offer is written. The Copy link button does the same. It keeps the buydown you picked, your credit score and every number on the page. Any number in a link is held inside the same ranges the boxes use, so a typo cannot make an impossible estimate.