3-2-1 Temporary Rate Buydown 2027 Calculator

Calculate 3-2-1 temporary mortgage rate buydown for 2027 — payment reduction at 3%, 2%, 1% below note rate in years 1-3, plus seller-paid buydown cost.

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How 3-2-1 Buydown Works

Year 1: pay rate = note rate − 3% (e.g., 7% note → 4% first year). Year 2: note rate − 2% (5%). Year 3: note rate − 1% (6%). Year 4+: full note rate. Seller (or builder) prepays the difference into escrow.

Seller's Cost

Buydown amount = sum of monthly payment differences for 36 months. For $400k loan at 7% with 3-2-1: ~$22,000 in cost. Seller often offers as alternative to price reduction — preserves comp value for next sale.

When Buydown Beats Discount

Buyer gets short-term affordability without permanent price impact. Refi if rates drop = buydown unused refunded. If you stay full term, buydown costs LESS than equivalent rate reduction loan.

Source: Freddie Mac buydown guidelines 2026. Last updated: May 2026.