Compare a seller closing-cost credit, lower home price, permanent mortgage-rate buydown, and 2-1 or 3-2-1 temporary buydown using actual lender quotes.
Lowest modeled financing cost at 5 years
Lower purchase price
$131,265 of modeled buyer financing cost, $333 below the next option at this horizon.
Cash to close
$57,800
Lower purchase price; down payment plus modeled buyer-paid costs
Initial monthly P&I
$2,557
Fixed principal and interest
Buyer cash through year 5
$211,206
Cash to close plus buyer-paid principal and interest
Remaining mortgage balance
$370,058
After 60 scheduled payments
Modeled equity
$79,942
Common entered home value minus balance; no appreciation assumed
Buyer financing cost
$131,265
Non-down cash + P&I − principal repaid + negotiated price adjustment
$2,557/mo
Financing-cost break-even vs closing credit: Already lower at closing
$2,627/mo
Financing-cost break-even vs closing credit: Reference option
$2,461/mo
Financing-cost break-even vs closing credit: 45 months
Y1 $2,113 · Y2 $2,363 · then $2,627
Financing-cost break-even vs closing credit: 24 months
| Horizon | Lower purchase price | Closing-cost credit | Permanent rate buydown | 2-1 temporary buydown | Lowest |
|---|---|---|---|---|---|
| 1 year | $28,480 | $29,206 | $36,171 | $32,236 | Lower purchase price |
| 3 years | $80,542 | $82,694 | $84,577 | $82,564 | Lower purchase price |
| 5 years | $131,265 | $134,806 | $131,597 | $134,676 | Lower purchase price |
| 7 years | $180,453 | $185,342 | $177,053 | $185,212 | Permanent rate buydown |
| 10 years | $250,870 | $257,688 | $241,851 | $257,558 | Permanent rate buydown |
Financing cost removes principal repaid and values the same home at the common entered home value in every scenario. This preserves the value of a negotiated price reduction instead of treating the home itself as worth less. Cumulative cash remains visible for liquidity planning.
Entered lender quote
$9,200
2-1 subsidy deposit
Modeled payment differences
$9,330
Full note P&I minus temporary buyer P&I
Quote difference
$130
Ask the lender to explain timing, rounding, fees, or a different schedule
Each option starts with the same entered seller negotiation budget. A price reduction lowers the purchase price, percentage-based down payment, and loan amount. Credit and buydown options keep the price unchanged and apply no more than the seller budget, lender-approved limit, or eligible modeled costs.
Fixed-payment and remaining-balance figures use standard amortization. A temporary buydown does not change the mortgage note: its subsidy account supplies the difference between the temporary buyer payment and the full note payment, so the balance follows the note-rate amortization schedule.
The highlighted result minimizes buyer financing cost at the chosen horizon: buyer-paid closing cash other than the down payment, plus buyer P&I, minus principal repaid, plus the scenario purchase-price adjustment relative to the common entered home value. Using one property value across the scenarios keeps the negotiated price reduction in the comparison. Cash to close, cumulative buyer cash, and equity are shown separately because the lowest long-run cost may require more money up front.
Quoted points are never converted to a rate. The permanent scenario uses exactly the lower rate and total cost entered from the lender quote because point pricing varies by lender, loan, borrower, and market.
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Home-purchase negotiation guide
A $10,000 concession does not have the same effect in every form. A closing-cost credit preserves cash today, a lower price reduces the loan, a permanent buydown trades upfront cost for ongoing interest savings, and a temporary buydown changes only the early payment schedule.
The useful comparison depends on the actual lender quotes and how long you expect to keep this mortgage—not a universal rule of thumb.
Ask for the baseline loan, a permanent-rate option with its exact points and dollar cost, and any temporary-bydown agreement.
Have the lender translate program, occupancy, LTV, and eligible-cost rules into the maximum dollar credit for this transaction.
Compare the shortest, longest, and most likely time before selling, refinancing, or paying off the mortgage.
Verify the final price, points, seller credit, payment schedule, and cash to close on the Loan Estimate and Closing Disclosure.
A usable seller credit reduces the buyer cash needed at settlement immediately. A price cut generally reduces the financed balance only by the price reduction multiplied by the loan-to-value share, so its monthly benefit accumulates gradually.
A genuinely lower fixed rate reduces every scheduled principal-and-interest payment. The break-even date is the point when accumulated financing savings overcome the additional buyer-paid cost compared with taking a simple closing credit.
This calculator compares user-entered loan structures; it does not approve a concession, determine mortgage eligibility, value the property, interpret a purchase contract, or replace a Loan Estimate or Closing Disclosure. Confirm every credit, buydown term, and unused-fund rule with the lender and appropriate real-estate professionals before amending an offer.
No. The credit can reduce eligible settlement cash dollar for dollar when fully usable. A price cut reduces the purchase price, down payment, and loan balance, producing a smaller immediate cash effect but ongoing interest savings.
No. One point describes a charge equal to 1% of the loan amount, not a guaranteed rate reduction. Rate pricing varies, which is why this calculator requires the actual quoted rate and dollar cost.
It changes the amount the buyer pays during the first two years, but not the note rate. Subsidy funds make up the difference, and the buyer payment rises to the full note payment after the temporary schedule ends.
The model caps it at the lowest of the negotiated budget, lender-approved dollar limit, and entered eligible costs. Actual program and disclosure rules may be more restrictive.
Test several. Include the possibility of a sale, refinance, relocation, or early payoff. A permanent buydown that looks attractive over ten years may not recover its cost if the mortgage lasts only two years.
