Full note-rate P&I / month$2,445.84Your reference point throughout the loan.
Borrower payment Temporary subsidy
HOW THE PAYMENT CHANGESPRINCIPAL & INTEREST ONLY
Complete the highlighted fields to see your illustration.
YEAR 1
$1,973.264.99% payment rate
Note rate minus 2 points
Monthly subsidy$472.59
YEAR 2
$2,203.985.99% payment rate
Note rate minus 1 point
Monthly subsidy$241.86
YEAR 3 ONWARD
$2,445.846.99% note rate
Full note-rate payment
Monthly subsidy$0.00
ESTIMATED TOTAL BUYDOWN SUBSIDY
12 months at each temporary payment
$8,573.38
Illustrative principal-and-interest example, not a rate offer or
loan quote. Taxes, insurance, HOA dues, mortgage insurance, and
other costs are not included. Displayed amounts are rounded;
calculations retain full precision.
IF THE LOAN IS PAID OFF EARLY
What might remain?
No refinance is assumed or guaranteed.
Month 6Month 12
Estimated unused buydown funds at payoff$4,792.69
Assumes the selected month’s scheduled subsidy has been used. How
unused funds are handled depends on the written buydown agreement
and payoff terms; this is not a guaranteed credit or loan-balance
reduction.
THE STRATEGY, IN MOTION
See a seller credit in action.
A $400,000 home. Three people. One negotiated credit. Follow a fictional buyer from the offer to a possible month-eight refinance.
A seller-credit story
Fictional characters and estimated results. Play with sound, turn on captions if you prefer, or read the scenario below.
Read the scenario, numbers & assumptions +
This is a fixed illustration; it does not change when you adjust the calculator above.
The offer: a credit with a purpose.
Maya is buying Theo’s $400,000 home with $32,000 down (8%) and a $368,000, 30-year fixed-rate loan. Alex negotiates a $8,573.38 seller credit to fully fund a 2-1 buydown. Maya contributes $0 toward the buydown itself; her down payment and other purchase costs remain her responsibility. Theo pays the credit as a seller concession at closing.
The payments: room in the early budget.
Using an illustrative 6.99% note rate, Maya’s monthly principal and interest is $1,973.26 in year one, $2,203.98 in year two, and $2,445.84 from year three onward. The first-year subsidy is approximately $472.59 per month. The note rate stays the same, and Maya qualifies at the full note-rate payment.
After payment eight: follow the remaining funds.
After eight scheduled subsidies, approximately $3,780.70 has supported Maya’s payments and $4,792.69 remains in the buydown account. Now assume Maya qualifies for and completes a refinance that makes financial sense. Under the program terms illustrated here, the unused funds are available as a credit toward refinance closing costs. The written agreement and settlement timing control how that credit is applied.
Illustrative refinance costs$6,000.00
Less available buydown credit− $4,792.69
Remaining costs for Maya to cover$1,207.31
The credit comes from the same seller-funded account that supported the early payments. It is not additional money on top of the original credit, and reaching month eight alone does not trigger a refund.
Assumptions: Eligible primary-residence loan; appraised value at least $400,000; no other seller credits; sufficient seller-contribution allowance; and a written agreement permitting this treatment of unused funds. The credit is about 2.14% of the purchase price. Seller-contribution limits and lender rules apply. Actual amounts and settlement timing may differ.
Payment figures include principal and interest only. Taxes, insurance, mortgage insurance, HOA dues and other costs are excluded. The rate is an illustration, not an offer; APR and future refinance pricing are not modeled. A refinance requires separate qualification, may involve additional costs, and is not assured. If no refinance occurs, the buydown continues on its agreed schedule. Calculations retain full precision; rounded displays may differ by a few cents.
Full narration transcript
The narration follows the same purchase, payment and refinance example above.
02 / DSCR FINANCING · INVESTMENT PROPERTY
A rental property. A different lens.
For an investment property, the conversation may begin with what the
property earns. DSCR means
debt-service coverage ratio: a comparison of
eligible rental income to debt service.
This example uses monthly rent divided by PITIA: principal,
interest, taxes, insurance, and association dues. Lender
calculations vary.
KEEP THE WIDER VIEW
A ratio is one part of the review. Lenders may also consider
credit, assets, reserves, property eligibility, valuation, and
other factors.
1.20x is an example, not an approval cutoff. The dial displays 0–2x;
the numeric result remains uncapped. PITIA does not capture every
ownership cost, such as maintenance or vacancy.
A WINDOW INTO YOUR BUSINESSCONCEPTUAL EXAMPLE
EARLIER 12 MONTHSMOST RECENT 12 MONTHS
12 MONTHS / RECENT ACTIVITY
The most recent chapter.
One year of statements can show recent business activity. A
shorter window may leave earlier seasonality or changes outside
the picture.
Invented deposit-pattern illustration, with no dollar scale. Bars
are not qualifying income. No approval or loan amount is
calculated.
03 / 12- OR 24-MONTH BANK STATEMENTS
Your income story deserves context.
Some programs use 12 or 24 months of bank statements as an
alternative way to document income, often for self-employed
borrowers.
Think of a business owner with strong deposits and substantial
business deductions on tax returns. A statement-based program may
offer a different documentation path, subject to the lender’s
analysis and guidelines.
DOCUMENTATION STILL MATTERS
Statements are documentation, not a no-document loan. Lenders
may adjust deposits for transfers, one-time amounts, business
expenses, ownership, and other program rules.
For agents and buyers, these are prompts to explore together.
01THE HOME PURCHASE
2–1Temporary buydown
A little room at the beginning.
THE FIRST YEARS
“We love the home. Let’s talk payment.”
A buyer is concerned about the first years of payments. Explore
whether a temporary buydown is available, who may fund it, and how
the full payment fits.
AGENT CONVERSATION STARTER
“Would it help to compare the first two years with the full
note-rate payment?”
An investor is evaluating a property. Compare rent with expected
monthly carrying costs and ask whether a DSCR program fits the
property and investment plan.
AGENT CONVERSATION STARTER
“What rent and carrying costs should we bring to a lender for
review?”
A self-employed buyer’s tax-return income differs from business
cash flow. Ask whether a statement-based approach is available and
how deposits and expenses are reviewed.
AGENT CONVERSATION STARTER
“Could a 12- or 24-month statement review help document your
income?”
No, in this illustration the note rate remains fixed. The
subsidy changes the amount paid initially; the loan documents
determine the note rate and how the subsidy is applied.
How is a borrower qualified with a temporary buydown?
Qualification rules depend on the loan and lender. Some
programs evaluate the borrower using the full note-rate payment;
a lower initial payment does not by itself establish eligibility.
Confirm the applicable requirements with the lender.
Are buydowns available for investment properties?
Availability depends on the specific loan program, property, and
lender. Ask whether the option is available for the property and
occupancy you have in mind.
What does DSCR measure?
Debt-service coverage ratio compares income with debt service.
Our illustration divides monthly eligible rent by monthly PITIA.
A 1.20x result means rent is 120% of those costs. Definitions,
thresholds, and other underwriting requirements vary by lender.
It is not a complete investment return calculation.
Are bank statement programs the same across lenders?
No. Statement windows, acceptable accounts, eligible deposits,
expense adjustments, and borrower requirements vary. The lender
examples in the market use different approaches. “Non-QM” does
not mean no verification or no ability-to-repay review;
applicable requirements depend on the loan.
Does a future refinance come with a buydown?
No. A refinance would be a separate loan decision, subject to
then-current rates, costs, property value, and eligibility. Plan
for the full note-rate payment. The unused-funds estimate is not
a promise of a refinance or credit.
LET’S START WITH YOUR SCENARIO
Bring the question. Let’s explore the possibilities.
Whether you’re guiding a buyer or planning your next move, a
useful conversation starts with the situation in front of you.
This is an advertisement. The information on this page is for general
educational purposes and is not a loan offer, approval, prequalification,
or commitment to lend. Loan programs, rates, terms, costs, availability,
and eligibility vary and are subject to lender guidelines, application,
verification, underwriting, and approval.
Calculator results are estimates based only on the values entered. The
2-1 buydown illustration estimates principal and interest; it does not
include taxes, insurance, mortgage insurance, HOA dues, or other costs
unless entered. A temporary buydown does not change the note rate, and
the payment may increase to the full note-rate payment. Confirm all
figures and terms with the lender for the specific loan.
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