Temporary buydown · Seller credit
How much seller credit does the buydown need?
Enter the price, down payment, rate, and structure. Results update as you type: the payment for each year, the credit to ask for, and how it stacks up against a price reduction.
Seller credit needed
≈ $14,144
2-1 buydown on $600,000 at 7.25%, 30-year fixed
Year 1 $9,358.08 + Year 2 $4,785.12 = $14,143.20, rounded up
- Year 1 payment
- $3,313/mo
- From year 3
- $4,093/mo
- Seller covers, year 1
- $780/mo
- Share of price
- 1.89%
FitsWithin the 6% Conventional limit (20% down). The seller can contribute up to $45,000, leaving $30,857 for closing costs. The limit is figured on the lower of the price or the appraised value; this assumes the home appraises at or above the price.
Monthly payment, year by year
Principal and interest. The full bar is the payment at the note rate. Taxes, insurance, HOA dues, and mortgage insurance are not included, so the actual payment will be higher.
Year 15.25%
$3,313/mo
Seller covers $780/mo
$9,358.08 for the year
Year 26.25%
$3,694/mo
Seller covers $399/mo
$4,785.12 for the year
Years 3–307.25%
$4,093/mo
Full payment
The remaining 28 years
Compare structures
Same loan and rate. Click a row to use it.
$45,000 seller limit
Buydown or price reduction?
The same $14,144 or so from the seller, spent two ways.
2-1 buydown
Lower payment up front
Price reduction
Smaller payment for good
Purchase price
Buydown: $750,000
Price reduction: $735,856
Loan amount
Buydown: $600,000
Price reduction: $588,685
Year 1 payment
Buydown: $3,313/moLower
Price reduction: $4,016/mo
Year 2 payment
Buydown: $3,694/moLower
Price reduction: $4,016/mo
Years 3–30 payment
Buydown: $4,093/mo
Price reduction: $4,016/moLower
Total savingsIf the loan is kept 30 years
Buydown: $14,144
Price reduction: $27,788More
Total savings over time
Break even
15 yrs 4 mo
The buydown saves more up front: $703 less a month than the price reduction in year 1. The price reduction saves less each month, but it never stops, and its total savings pass the buydown after 15 years 4 months. If the buyer is likely to refinance or sell before then, the buydown is the better use of the credit.
How the price reduction saves: A lower price means a smaller loan. The payment on $588,685 is $4,016 a month, versus $4,093 on $600,000. That $77 difference lasts for the life of the loan.
Price reduction keeps the same 20% down payment, so the loan drops by $11,315. Principal and interest only; a lower price may also lower property taxes and mortgage insurance.
Estimate of principal and interest only. Property taxes, insurance, HOA dues, and mortgage insurance are not included. The interest rate is one you entered; it is not a rate quote, an offer of credit, or a rate lock, and an annual percentage rate (APR) is not calculated. Not a loan approval or a commitment to lend. Each year is figured at the reduced rate over the full term. Payments are rounded to the cent; the seller credit is rounded up to the next dollar.
Before it goes in the offer
Six things the number does not tell you
01
The rate has to be real.
Rates move daily. The credit is only right if the rate is accurate. Make sure your buyer is fully pre-approved and gets a current rate estimate before making the offer. We recommend a little cushion in the seller credit in case rates move between your offer date and your accepted contract.
02
The buyer still qualifies at the full rate.
The buyer must qualify at the full note rate, not the reduced one. A buydown helps the monthly budget, not the approval. It lets buyers ease into their mortgage payment. It will not help them qualify for a bigger loan.
03
Seller credits are capped.
Conventional: 3% with less than 10% down, 6% with 10% to less than 25% down, 9% with 25% or more down, 2% on an investment property. FHA 6% and USDA 6% of the sales price. VA 4% of the VA appraised value. Conventional caps are figured on the lower of the price or the appraised value.
04
The buydown shares the cap with closing costs.
If the seller is also paying closing costs, both come out of the same limit on conventional, FHA, and USDA loans. Check the total, not just the buydown. VA is different: normal closing costs paid by the seller do not count toward its 4%.
05
The credit sits in an account.
It is funded at closing and drawn each month to cover the gap between the full and reduced payment.
06
Refinance or sell early and the money is not lost.
Buydown funds are not paid out to anyone in cash. If the loan is paid off early, what is left is generally applied to the payoff. The buydown agreement spells out exactly where it goes.
Buyer pre-approval
Get your buyer pre-approved.
Fill this out and Keri’s team will reach out to start a full pre-approval. Your buyer will know what to expect for closing costs, monthly payment, and cash to close before you write the offer.
Your calculator numbers are included
2-1 buydown on $600,000 at 7.25%, 30-year fixed
About $14,144 seller credit
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