Mortgage Rate Buydown 1-0 Calculator
A 1-0 buydown reduces your mortgage rate by 1 percentage point for the first 12 months, then snaps to the full note rate from year 2 onwards. Sellers often pay the buydown to close deals in higher-rate markets — calculate the year 1 savings before agreeing.
How 1-0 Buydowns Work
A 1-0 buydown reduces your effective rate by 1 percentage point for 12 months only. The seller or builder pays the escrow cost upfront. From month 13, payments jump to the full note rate. Underwriting uses the note rate to qualify the borrower — not the temporary buydown rate.
When 1-0 Buydowns Beat Permanent Points
If you plan to refinance within 18-24 months when rates drop, a temporary buydown is cheaper than permanent discount points. The escrow funds returned at refinance reduce the effective buydown cost further. For borrowers staying put, permanent points usually win at break-even of 5-7 years.
Year 2 Payment Shock Risk
CFPB and consumer advocates warn that 1-0 buydowns can trigger payment shock when the snapback happens. Always budget for the full note rate from month 1 — treat the year 1 savings as cash flow flexibility, not as your real budget.
Source: CFPB temporary buydown disclosures, Fannie Mae Selling Guide B5-7-03, Freddie Mac Bulletin 2022-15. Last updated: May 2026.