Payment at the note rate compared with the reduced payment in each buydown year. The monthly subsidy is the difference between the two.
Loan
%
$
2/1 buydown
1/0 buydown
Orig. monthly payment
$0.00
Principal & interest at the note rate
Same formulas as SGCP Temporary Buydown Calculator (1.31.25): 2/1 = note rate −2% in year 1 and −1% in year 2; 1/0 = note rate −1% in year 1. Annual subsidy = monthly subsidy × 12.