1-1 Buydown Calculator

A 1-1 mortgage buydown can help make homeownership more affordable by temporarily reducing your interest rate during the first year of your loan. This financing strategy may lower your initial monthly mortgage payments, helping create additional financial flexibility during the early stages of homeownership.

Our 1-1 Buydown Calculator helps you estimate potential payment savings and compare how a temporary rate reduction may impact your monthly mortgage payment during the first year of your loan.

What Is a 1-1 Buydown?

A 1-1 buydown is a temporary interest rate reduction program in which the mortgage rate is reduced by 1% during the first year before returning to the note rate for the remainder of the loan term.

For example:

• Note Rate: 6.50%
• Year 1 Rate: 5.50%
• Year 2 and Beyond: 6.50%

The difference in payment is typically funded through a buydown subsidy, which may be paid by a seller, builder, lender, or other interested party when permitted.

Why Consider a 1-1 Buydown?

A temporary buydown may help borrowers:

• Reduce initial monthly payments
• Improve early affordability
• Create additional cash flow flexibility
• Ease the transition into homeownership
• Preserve savings during the first year
• Potentially increase purchasing power

Use the calculator below to compare payment scenarios and see how a 1-1 buydown may affect your mortgage.

Understanding Your Results

The 1-1 Buydown Calculator estimates the potential payment difference between a standard mortgage payment and a temporary first-year reduced-rate payment.

Your results may help you understand:

• First-year payment savings
• Monthly payment comparisons
• Estimated buydown benefits
• Total temporary savings
• Long-term payment expectations
• Mortgage affordability scenarios

Actual savings vary based on loan amount, interest rate, loan term, and specific buydown structure.

How a 1-1 Buydown Works

During the first year of the mortgage, borrowers make payments using the temporarily reduced interest rate.

After the first year:

• The mortgage rate returns to the original note rate.
• Monthly payments adjust accordingly.
• The loan continues under the agreed-upon terms.

Because the reduction is temporary, borrowers should prepare for future payment adjustments when evaluating affordability.

Advantages of a 1-1 Buydown

Lower Initial Payments

Reduced payments during the first year may provide additional financial flexibility after moving into a new home.

Increased Affordability

Some borrowers find that lower initial payments help ease the financial transition into homeownership.

Seller or Builder Incentives

In certain transactions, sellers or builders may contribute funds toward the buydown to help attract buyers.

Greater Cash Flow Flexibility

Temporary payment reductions may free up funds for:

• Moving expenses
• Home improvements
• Furnishings
• Emergency savings
• Other financial priorities

Important Considerations

Before choosing a 1-1 buydown, consider:

Future Payment Increases

Monthly payments will increase after the temporary discounted period ends.

Long-Term Affordability

Borrowers should ensure they are comfortable with the full payment at the note rate.

Loan Program Eligibility

Not all mortgage programs permit temporary buydowns. Availability varies by lender and loan type.

Alternative Strategies

Depending on your goals, other options may include:

• Larger down payments
• Adjustable-rate mortgages
• Permanent rate buydowns
• Different loan programs

Is a 1-1 Buydown Right for You?

A temporary buydown may be beneficial for borrowers seeking lower initial payments while maintaining long-term homeownership plans. Comparing multiple financing strategies can help determine the approach that best aligns with your budget and financial objectives.

Contact us today to explore 1-1 buydown options, compare financing scenarios, and build a mortgage strategy tailored to your goals.