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Mortgage Buydown Savings Calculator
Calculate whether paying discount points to permanently lower your mortgage rate is worth it. See monthly payment savings, the break-even month, and interest saved over the expected hold.
1 point = 1% of loan amount, paid at closing.
Typically 0.125–0.375% per point; lender-dependent.
Monthly savings
$132
vs the no-points payment
Points cost upfront
$8,000
New rate: 6.250%
Break-even
61 mo
5.1 years
Net savings over hold
$4,626
after recovering point cost
Lifetime vs expected hold
Savings if you hold the full term
$39,348
Gross savings $47,348 minus the point cost.
Savings over expected hold
$12,626
Across 96 months, before recovering the upfront point cost.
Buying down the rate only pays off if you hold the loan past the break-even month. A refinance or early sale can throw away the upfront point cost.
How to Use
- Enter the loan amount, base rate (no points), and term in years.
- Enter the number of discount points you'd pay and the rate reduction per point your lender offers.
- Enter how long you realistically expect to hold the loan before selling or refinancing.
- Review the monthly payment savings and the break-even month where the payment savings equal the upfront point cost.
- Only buy down the rate if your expected hold clearly exceeds the break-even.
Frequently Asked Questions
What is a discount point?
One point equals 1% of the loan amount paid upfront at closing in exchange for a lower rate. Each lender publishes how much rate reduction each point provides — usually 0.125%–0.375% per point.
How do I know if points are worth it?
Calculate the break-even month: upfront point cost divided by monthly payment savings. If you expect to keep the loan past that month, points usually pay off. Refinancing or selling before break-even erases the benefit.
Is a permanent buydown the same as a temporary 2-1 buydown?
No. A permanent buydown lowers the rate for the life of the loan via discount points. A temporary buydown (like 2-1 or 3-2-1) lowers payments for the first 1–3 years only, using an escrow funded by seller credits or the buyer.
Can I finance the points into the loan?
Some programs allow it, but this increases the loan balance and reduces the payment savings. Most borrowers pay the points in cash at closing from the down payment budget or seller credits.
Related Calculators
Mortgage Points Calculator
Size point costs against specific rate buydown offers from a lender.
Closing Cost vs Rate Calculator
Compare lower-rate high-cost offers to higher-rate low-cost offers head to head.
Temporary Buydown Calculator
Model 2-1 or 3-2-1 temporary buydowns instead of permanent points.
Refinance Break-Even Calculator
Same break-even logic applied to a full refinance vs the current loan.
Mortgage Calculator
Baseline mortgage payment math before adding points or buydowns.
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