Price Reduction vs. Temporary Buydown Calculator
Considering a price reduction on a Colorado listing? Compare how the same dollar amount could affect a buyer's payment if used as a lower purchase price or a seller-funded temporary mortgage buydown. Explore conventional, FHA and VA scenarios, including estimated taxes, insurance, financed program fees and potential funds for other closing costs.
Price reduction or temporary buydown?
Compare two ways to use the same seller dollar amount. See the payment at a lower price alongside temporary payment relief at the current list price.
Colorado Springs & El Paso County: (719) 960-4300 · Denver Metro: (720) 988-5182
[email protected] · 17445 Sierra Way · Monument, CO 80132
MonumentalMortgage.com · Schedule: MonumentalMortgage.com/strategycall
Company NMLS 1822778 · Equal Housing Opportunity
Your listing scenario
All illustrations use a 30-year fixed term. Taxes, homeowners insurance and HOA dues stay the same in both scenarios. Starting figures and rates are editable examples, not current loan offers.
Interest rates by loan program
FHA insurance & VA funding fee
Auto uses 0.55% through a $726,200 base loan, or 0.75% above it, based on the published FHA premium table. Override with the applicable lender-confirmed rate. Monthly MIP is an initial estimate, held constant here.
FHA upfront MIP and any VA funding fee are financed. They are recalculated at each purchase price. Conventional assumes no PMI at 20% down; VA has no monthly mortgage insurance.
Other closing costs & existing concessions
If entered, this limits the leftover credit shown as usable. Include only costs still payable after any other credits; exclude the buydown itself.
Primary-residence illustration. Conventional and FHA checks use a 6% ceiling; the VA buydown check uses a 4% ceiling. Ordinary VA seller-paid closing costs may be treated separately. Assumes appraised/reasonable value equals list price. These are preliminary screens; lender review determines eligibility.
Property & agent details for the report
| Payment period | Original list price* | Price reduction* | Temporary buydown* | Buydown advantage / mo. |
|---|
The original payment assumes the current list price without a buydown. Buydown advantage compares the temporary-buydown payment with the price-reduction payment; a negative advantage means the lower-price scenario has the lower payment. All figures include entered taxes, homeowners insurance, HOA and estimated FHA monthly MIP where applicable.
| Purchase details | Price reduction | Full-price buydown |
|---|
The temporary subsidy changes the buyer’s payment contribution. The contractual note rate and full-price loan balance are not reduced by the buydown.
Loan program comparison
Each row uses its own selected fundable structure, shown below. The original list-price payment is also the full payment after the buydown ends. Compare strategies within a program; the programs have different down payments, rates, fees and eligibility.
| Program / structure | Original list-price payment* | Lower-price payment* | Year 1 buydown* | Other closing cost funds |
|---|
Price Reduction vs. Buydown FAQs
How does a price reduction compare with a temporary buydown?
A price reduction lowers the purchase price, which reduces the loan amount and generally lowers the scheduled mortgage payment. A temporary buydown keeps the higher purchase price and uses funded assistance to reduce the buyer's introductory payments. Compare the early payments, the full payment afterward, the down payment and the total loan amount before deciding which approach fits the buyer's goals.
Why does the calculator show only some buydown structures?
It lists only structures whose full subsidy fits within the entered seller budget and the modeled contribution ceiling for that program. It also excludes negative payment calculation rates. FHA 3-2-1 is included for participating lenders; availability must be confirmed. A structure passing these checks still needs lender and program approval.
What happens if the seller budget is more than the buydown costs?
The tool shows the remaining amount as potential funds for other eligible buyer closing costs. Available credits are limited by actual eligible expenses, applicable contribution limits and lender approval. If you enter an estimate of remaining eligible costs, the tool limits its displayed usable remainder accordingly. Any known unallocated balance is shown separately.
Are the seller's net proceeds identical in these two scenarios?
Not necessarily. The calculator compares an equal dollar price reduction and seller credit, before commissions, taxes and other transaction charges. Costs based on purchase price may differ. Ask the listing agent or settlement provider to prepare seller net sheets for the actual offers.
Why is the full payment after the buydown important?
After the subsidy ends, the buyer makes the full scheduled principal-and-interest payment at the original note rate. With the higher purchase price and loan amount, that payment will generally exceed the payment on the reduced-price home. The buyer should be comfortable with the full payment and qualify under applicable underwriting rules without assuming a future refinance.
Do the payment estimates include taxes, insurance and government loan fees?
The estimates include the annual taxes, homeowners insurance and monthly HOA dues entered. FHA also includes financed upfront mortgage insurance and an estimate of initial monthly mortgage insurance. VA includes the financed funding fee unless exempt is selected. Actual premiums and expenses may differ and can change over time.
Want to review a Colorado listing scenario? Jeremy Murphy at Monumental Mortgage can help you and your real estate agent compare the payment options and confirm which seller credits may be available.
Office:
17445 Sierra Way
Monument, CO 80132
Call
720-988-5182
719-960-4300
Email:
Site:
MonumentalMortgage.com
