A temporary rate buydown lowers your mortgage interest rate for the first one to three years of the loan, easing your monthly payment while you settle into your new home. Buyers often negotiate the cost as a seller credit, which can make a buydown a useful tool when shopping for a Honolulu or Waikiki condo. Enter your numbers below to compare a 3-2-1, 2-1, 1-1-1, 1-1, or 1-0 buydown and see the estimated cost of the subsidy.
| Year | Rate | Principal & interest | Total monthly | Monthly savings |
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Loan amount: –. The buydown cost equals the total payment savings during the reduced-rate years, typically funded up front at closing.
Wondering if a seller-paid buydown fits your condo purchase? Let's look at current listings and how a credit could be structured in your offer.
Talk With MichaelWith a 2-1 buydown, your interest rate is two percentage points below the note rate in year one and one point below in year two. From year three forward, you pay the full note rate for the remaining life of the loan. A 3-2-1 buydown adds a third year of savings, a 1-1-1 buydown holds the rate one point lower for each of the first three years, and a 1-0 buydown reduces the rate by one point for the first year only.
The cost can be paid by the seller, the builder, the buyer, or occasionally the lender. On Oahu condo purchases, buyers frequently negotiate a seller credit to fund the buydown, which is held in a custodial account and applied to each monthly payment during the reduced-rate period. Loan programs set limits on how much a seller can contribute, so confirm the numbers with your lender.
It depends on your goals. A price reduction lowers the loan balance for the full term, while a buydown concentrates savings in the first few years. Buyers who expect income growth, plan to refinance if rates fall, or want breathing room after closing costs and moving expenses often find a buydown appealing. Running both scenarios side by side is a smart step before writing an offer.
In most cases, lenders qualify you at the full note rate rather than the reduced first-year rate. That means a buydown helps your cash flow but generally does not increase how much home you can afford.
This calculator provides estimates for educational purposes only and is not a loan offer, commitment to lend, or financial advice. Actual rates, payments, and buydown costs depend on your lender, loan program, and qualifications. Consult a licensed mortgage professional for personalized figures.
Call Michael at 808.626.5229 or send a message.
