Free VA Tool
VA Loan Buydown Calculator
See exactly what a 2-1, 1-1, or 1-0 temporary buydown does to your VA payment — year-by-year payments, first-year savings, and the total cost to ask the seller to cover.
Year 1 @ 4.500%
$1,773/mo
Year 2 @ 5.500%
$1,987/mo
Year 3+ @ 6.500%
$2,212/mo
Total Buydown Cost
$7,966
Year one saves you $439/month. On VA loans the buydown fund is typically paid by the seller or builder as a concession — ask for it in your offer instead of a price cut and compare which wins.
Temporary buydowns prepay the payment difference into an escrow — your note rate never changes, and you must qualify at the full note rate. Educational estimate only; concession limits and program availability depend on your scenario.
What a temporary buydown really is
A temporary buydown doesn’t change your loan — it prepays part of your payment. At closing, a lump sum (almost always a seller or builder concession on VA purchases) goes into an escrow account, and each month that escrow covers the difference between your full payment and the reduced one. Your note rate never changes, you qualify at the full rate, and if you refinance or sell early, unused escrow funds are credited back against your balance.
That last detail makes the 2-1 buydown a coherent strategy when rates are expected to fall: lower payments now, an IRRRL streamline refinance later, and the leftover escrow returned — versus a price cut, which delivers a smaller benefit spread over 30 years.
2-1 buydown cost by loan size (6.5% note rate)
What the escrow costs — the number to negotiate from the seller — and what year one looks like, computed at a 6.5% note rate:
| Loan Amount | Full Payment | Year 1 Payment (4.5%) | Year 1 Savings/mo | Total Buydown Cost |
|---|---|---|---|---|
| $250,000 | $1,580 | $1,267 | $313 | $5,690 |
| $325,000 | $2,054 | $1,647 | $407 | $7,397 |
| $400,000 | $2,528 | $2,027 | $502 | $9,104 |
| $500,000 | $3,160 | $2,533 | $627 | $11,380 |
30-year fixed at a 6.5% note rate; 2-1 structure (−2% year one, −1% year two). Computed with the same amortization math as the calculator above.
Good to Know
Questions this tool raises
What is a 2-1 buydown?
A temporary rate reduction: your payment is calculated at 2% below the note rate in year one and 1% below in year two, then returns to the full rate. The payment difference is prepaid into an escrow at closing — usually funded by the seller or builder, not you.
Are buydowns allowed on VA loans?
Yes — temporary buydowns are permitted on VA purchase loans, and the funds typically come through seller or builder concessions. You must still qualify at the full note rate, which protects you from payment shock.
Buydown or price reduction — which should I negotiate?
Run both: a $10,000 price cut lowers your payment a little forever; $10,000 in buydown escrow lowers it a lot for one or two years. If you expect to refinance (IRRRL) when rates drop, the buydown often wins. The calculator gives you the buydown side of that comparison.
What happens to the buydown money if I refinance or sell early?
Unused escrow funds are typically credited against your loan balance at payoff — the money isn't lost. That makes buydown-then-IRRRL a coherent strategy in a falling-rate environment.
Is a permanent rate buydown (points) better?
Points permanently lower the rate but cost more per unit of monthly savings and take years to break even. Temporary buydowns front-load the relief. Which wins depends on how long you'll hold the loan — we run both when you're pre-approved.