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Permanent Buydown Calculator
Permanent buydowns use builder/seller credits to buy discount points, reducing rate for the full loan life. This calculator sizes the credit needed and lifetime savings. Builder buydowns often offer in-house financing with the buydown baked in. Mortgage credit equals points-cost × rate-reduction-per-point. Some builder programs have maximum LTV or credit score requirements. Seller/builder-funded points can exceed concession caps only when structured as rate buy-down (not general closing credit). Check lender guidance on structuring to avoid capping.
Seller/builder credit needed
$16,000
Points needed
4
Monthly payment savings
$263
Savings over hold period
$22,093
Net savings after credit (if borrower paid)
$6,093
How the math works
$400K at 7% → 6% = 1% reduction. At 0.25% per point: 4 points = $16,000 credit. Monthly savings $266; lifetime (30-yr) ~$95,800.
If seller/builder pays the $16K credit, borrower gets the full rate reduction at zero cost — huge win. Negotiate aggressively for this in buyer's markets.
How to Use
- Enter loan amount, base rate, desired reduced rate, and points per %-point.
- See credit needed, monthly savings, and lifetime savings.
Frequently Asked Questions
Permanent vs temporary buydown?
Permanent: rate reduced for full loan. Temporary (2-1 or 3-2-1): rate reduced first 2-3 years, then rises to note rate. Permanent costs more upfront but keeps saving forever.
Who pays?
Anyone — borrower, seller, or builder. Seller credits capped by concession limits (3-9% of price depending on loan). Builder credits on new construction often 2-4% of price.
Are buydown points tax-deductible?
Only if paid by the borrower. Seller/builder-paid credits aren't the borrower's deduction. Limits the tax benefit for most buydowns.
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