Seller-Paid Rate Buydown Calculator
Should the seller cut price or fund a rate buydown? Compare buyer's payment savings, seller's net cost, and break-even on 2-1 and 3-2-1 temporary buydowns common in 2026 high-rate markets.
| Note rate full payment | — |
| Year 1 payment (buydown) | — |
| Year 2 payment | — |
| Year 3 payment | — |
| Total buyer savings | — |
| Seller credit required | — |
Temporary rate buydowns (2-1 and 3-2-1) became the standard seller concession in high-rate 2023–2026 housing markets. The seller funds an escrow that pays down the buyer's interest rate for the first 1–3 years, dramatically reducing buyer payment shock without a price cut.
How 2-1 and 3-2-1 Buydowns Work
2-1 buydown: rate is 2% below note rate in Year 1, 1% below in Year 2, full rate from Year 3 forward. 3-2-1 buydown: 3% below Y1, 2% below Y2, 1% below Y3, full rate Y4+. The seller pre-pays the difference into an escrow at closing; the loan note rate is unchanged.
Why Buydown Beats a Price Cut
A $9,000 price cut reduces the buyer's monthly payment by about $60. A $9,000 seller-funded 2-1 buydown can drop the buyer's Year 1 payment by $400+/month. The buyer feels relief immediately; the seller delivers the same dollar amount through a different channel. Sellers also win because the listed price stays the same — protecting comparable-sale data in the neighborhood.
When Buydowns Backfire
If the buyer can't qualify at the full note rate (lenders typically qualify based on note rate, not buydown rate), the deal won't fund. If rates don't drop enough for the buyer to refinance before the buydown expires, payment shock at Year 3+ can stress the household budget. Confirm DTI passes at note rate before signing.
Last updated May 2026. Sources: CFPB Temporary Buydown, Fannie Mae Selling Guide.