Mortgage Rate Buydown Cost vs Savings 2027 Calculator
Compare three ways of lowering a mortgage payment: a permanent buydown with discount points (this example: 2 points, costing 2% of the loan, for a rate 0.5 percentage points lower), a 2-1 temporary buydown (rate 2 points lower in year 1, 1 point lower in year 2) and a 3-2-1 temporary buydown. The price of a point and the rate cut it buys vary by lender and day; check your Loan Estimate for the real figures.
Permanent Buydown (Points)
One discount point costs 1% of the loan amount, paid at closing, in exchange for a lower rate for the life of the loan. How much the rate falls per point is set by the lender. This calculator uses one fixed example: 2 points for a 0.5 percentage point lower rate. On a $450,000 loan at 7% over 30 years the payment falls from $2,993.86 to $2,844.31; the $9,000 cost is recovered in about 5 years of $149.55 monthly savings.
Temporary Buydown 2-1
The payment is calculated at 2 percentage points below the note rate in year 1 and 1 point below in year 2, then at the full note rate. The difference is paid up front into a buydown account by the seller, builder, lender or buyer. Same example: $2,415.70 in year 1 and $2,697.98 in year 2, at an up-front cost of $10,488.57.
3-2-1 Buydown
The same idea over three years: 3, 2 and 1 percentage points below the note rate. Same example: $2,148.37 in year 1 and an up-front cost of $20,634.48.
Break-Even
For points, break-even is cost ÷ monthly saving. If you sell or refinance before then, the points cost more than they saved. A temporary buydown has no break-even: its cost equals the payment reductions.
Disclaimer
Taxes, insurance and mortgage insurance are not included. Not financial advice.
Method: standard amortisation formula on user inputs. Points definition: CFPB — What are discount points and lender credits? Last updated: October 2026.