Permanent vs Temporary Mortgage Buydown Calculator
Permanent buydowns (discount points) lower the rate for the full loan life. Temporary buydowns (2-1, 3-2-1) lower payments for 2-3 years only. The right choice depends on how long you keep the loan.
| Note rate payment | — |
| Permanent buydown payment | — |
| 2-1 year 1 / year 2 payment | — |
| Permanent cost (points × loan) | — |
| Temporary cost (2-1 escrow) | — |
| Permanent savings over hold period | — |
| Temporary savings over hold period | — |
Permanent buydowns (discount points) reduce the rate for the entire 30-year loan life. Temporary buydowns (2-1, 3-2-1) reduce payments only for the first 2-3 years. The right choice depends on how long you keep the loan: permanent wins for 6+ year holds, temporary wins for short holds or when seller-funded as a concession.
When Permanent Buydown Wins
Permanent buydowns cost ~1% of the loan amount per 0.25% rate cut (varies by lender and market). The break-even is typically 4-6 years — after that, you save money every month for the rest of the loan. If you plan to live in the home 7+ years and don't expect to refinance, permanent is usually the better deal. Bonus: discount points are typically tax-deductible in the year paid on a primary residence purchase, accelerating the break-even.
When Temporary Buydown Wins
Temporary buydowns shine when (a) the seller funds them as a concession (zero cost to you), (b) you expect rates to drop and plan to refinance in years 2-3, or (c) you need short-term payment relief during a job ramp or family transition. The 2-1 buydown is the most common builder concession in today's market — builders pay 2.5-3% of the loan price as a payment subsidy rather than cutting the sale price (which would hurt comps for future sales).
Last updated May 2026. Sources: CFPB Mortgage Guide.