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

≈ $14,148

2-1 buydown on $600,000 at 7.25%, 30-year fixed

Year 1 $9,360 + Year 2 $4,788 = $14,148 · rounded up to the dollar

Buydown savings, year 1: $780/mo
Year 1 payment: $3,314/mo
Full payment: $4,094/mo
Share of price: 1.89%

FitsWithin the 6% Conventional limit (20% down). The seller can contribute up to $45,000, leaving $30,852 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. Each full ring is the full payment; the green part is what the buydown covers that month. Taxes, insurance, HOA dues, and mortgage insurance are not included, so the actual payment will be higher.

Year 15.25%

$3,314per month

Saves $780/mo

Year 26.25%

$3,695per month

Saves $399/mo

Full payment

$4,094per month

Compare structures

Same loan and rate. Click one to use it.

Buydown or price reduction?

The same $14,148 or so from the seller, spent two ways, month by month.

2-1 buydown

Lower payment up front

Price reduction

Smaller payment for good

Purchase price

$750,000

$735,852

Loan amount

$600,000

$588,682

Year 1 payment

$3,314/moLower

$4,016/mo

Year 2 payment

$3,695/moLower

$4,016/mo

Full paymentAfter the buydown years

$4,094/mo

$4,016/moLower

Saves per month, year 1

$780/moMore

$78/mo

Disclaimer: Estimates for comparing options and preparing questions for a lender. Assumes a one-unit, single-family home the buyer will live in (unless marked as an investment property), a 30-year fixed-rate loan, and principal and interest only. Not a loan offer, rate quote, approval, or commitment to lend.

Before it goes in the offer

Six things the number does not tell you

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.

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.

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. On FHA loans, CMG will not raise the price after the appraisal to fund a seller credit.

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 and discount points up to 2% of the loan, paid by the seller, do not count toward its 4%.

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.

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.

Pre-approval

Get pre-approved.

Fill this out and Keri’s team will reach out to start a full pre-approval, so you know what to expect for closing costs, monthly payment, and cash to close before the offer.

Your calculator numbers are included

2-1 buydown on $600,000 at 7.25%, 30-year fixed

About $14,148 seller credit

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