How much does a 2-1 buydown cost in Colorado?
On a $500,000 loan at 6.5% over 30 years, a 2-1 buydown costs about $11,380, paid as a lump sum into an escrow account at closing. On most Colorado contracts the seller funds it as a concession. It cuts your rate by two points in year one and one point in year two, and then you pay the note rate for the remaining 28 years.
Every figure on this page is arithmetic on the numbers stated, produced by the same formula behind our payment calculator. It is not a quote and not an offer of credit.
What it costs, by loan size
All three rows assume a 6.5% note rate on a 30-year fixed loan. The cost is the total of the payments the escrow covers for you, so it moves with the loan amount and with the rate.
| Loan amount | Year 1 (4.5%) | Year 2 (5.5%) | Year 3+ (6.5%) | Buydown cost |
|---|---|---|---|---|
| $400,000 | $2,027/mo | $2,271/mo | $2,528/mo | $9,104 |
| $500,000 | $2,533/mo | $2,839/mo | $3,160/mo | $11,380 |
| $600,000 | $3,040/mo | $3,407/mo | $3,792/mo | $13,656 |
Read the $500,000 row as a monthly saving and it is easier to judge: the escrow covers $627 a month in year one and $321 a month in year two. That is the money the seller is being asked to put up.
2-1 buydowns, answered
How much does a 2-1 buydown cost in Colorado?
On a $500,000 loan at 6.5% over 30 years, a 2-1 buydown costs about $11,380. That is the full amount deposited into escrow at closing. It scales with the loan: roughly $9,104 on $400,000 and $13,656 on $600,000 at the same rate. It is arithmetic, not a quote, and what a lender charges to write the buydown can differ.
Who pays for a 2-1 buydown?
Most often the seller, as a concession negotiated into the contract, which is why it appears more in slower markets where sellers compete for offers. A builder may fund one on new construction, and a buyer can pay for their own. Nothing about the structure requires it to be the seller; it is simply where the money usually comes from.
Is a 2-1 buydown better than permanently buying down the rate?
It depends on how long you keep the loan and on what a point buys the day you lock, which moves. A temporary buydown concentrates the whole benefit into the first two years, which suits a buyer expecting income to rise or intending to refinance. A permanent buydown spreads a smaller saving across the life of the loan, which suits a buyer who will hold it. Ask a loan officer to price both against the same dollar amount on the day you lock, because that comparison cannot be made honestly from a table.
What happens to the buydown money if I refinance or sell early?
The subsidy sits in an escrow account and is released one month at a time, so if the loan is paid off partway through, the portion never released has not been spent. What happens to it is set by the buydown agreement you sign, and that is the clause worth reading before you agree to the structure. Ask your loan officer to show it to you specifically.
Does a 2-1 buydown change the rate on my loan?
No. The note rate is unchanged for all 30 years and the loan is underwritten at that rate. The buydown is a separate pot of money that pays part of your payment for you in years one and two. That is why it can be arranged after the rate is set, and why it disappears once the escrow is exhausted.
Want this priced on your actual contract?
A loan officer can tell you what the buydown costs on your loan, what the seller would need to contribute, and whether a permanent buydown does more with the same money.
Figures on this page are estimates computed from the amounts, rates and terms stated, for information only. They are not a quote, an offer, or a commitment to lend or extend credit. Your rate is set at approval and your payment depends on credit approval, underwriting, the property, taxes, insurance and any HOA obligation. All loans subject to credit approval. Vanna Lending, LLC dba Blue Pebble Loans, NMLS #2447767, licensed in CO, CA, NM, FL, & TX. Equal Housing Opportunity.