1-1-1 Temporary Rate Buydown Calculator 2027

Calculate 1-1-1 temporary mortgage rate buydown 2027 — seller funds 1% rate reduction year 1, 1% off year 2, then permanent rate. Common builder/seller concession.

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How 1-1-1 Works

Buyer pays based on temporary subsidized rate for 36 months. Seller deposits buydown funds into escrow at closing. Each month, escrow covers the rate difference for that period. After 3 years, full rate applies.

1-1-1 vs 2-1 vs 3-2-1

2-1 = -2% then -1% (2 years). 1-1-1 = -1% then -1% then -1% (3 years cheaper). 3-2-1 = -3%/-2%/-1% (3 years, more aggressive). 1-1-1 is moderate but lasts longer.

Underwriting Concerns

Lenders qualify borrower at the NOTE rate (year 3+), not subsidized rate. So your DTI must support full payment. Buydown is bonus only — not a path around debt-to-income limits.

Seller-Paid Buydown Limit

Fannie Mae caps seller-paid concessions at 3% of price for primary residence (LTV > 90%), 6% (LTV ≤ 90%). Buydown counts against concession total. Cash-back is illegal.

Source: fanniemae.com Selling Guide B2-1.4-04. Last updated: May 2026.