HOME BUYING TOOLS

Rate Buy-Down Calculator

When interest rates are high, lenders may offer you the option to "buy down" your rate by paying points upfront. This calculator helps you determine if that investment makes sense by showing your break-even point and potential savings over time.

Loan Details

VA Loan: Military service members typically have 3-5 year tours. Pay attention to whether your break-even point falls within your expected time in the home.
$
%
The rate offered without buying down
points
1 point = 1% of loan amount ($4,000)
$
Equivalent to 1.0 points
%
The lower rate your lender offers with the buydown

Buydown Analysis

Break-Even Point

16

months (1 year, 4 months)

Original Payment $2,661
New Payment $2,594

Monthly Savings

$67/month

Savings Over Time

Upfront cost: $4,000

5 Years

$20

net savings

10 Years

$4,040

net savings

20 Years

$12,080

net savings

30 Years

$20,120

net savings
years
= $1,628 net savings
This calculator provides estimates. Actual buy-down costs and savings depend on lender terms, loan amount, and market conditions.

Understanding Mortgage Rate Buydowns

What is a Rate Buydown?

A rate buydown—also called "buying points"—is when you pay an upfront fee to your lender in exchange for a lower interest rate on your mortgage. Each "point" typically costs 1% of your loan amount and usually reduces your rate by about 0.25%, though this varies by lender and market conditions.

Permanent vs. Temporary Buydowns

This calculator focuses on permanent buydowns, where your rate stays lower for the entire loan term. Some lenders also offer temporary buydowns (like 2-1 or 3-2-1 buydowns) where the rate is reduced for the first few years, then adjusts to the original rate.

When Does a Buydown Make Sense?

Good Candidates
  • Planning to stay in the home long-term
  • Have extra cash at closing
  • Want predictable, lower monthly payments
  • Buying in a high-rate environment
Consider Carefully
  • Military families (frequent relocations)
  • Job situations that may require moving
  • If you might refinance soon
  • When break-even exceeds 5+ years
Probably Not Worth It
  • Planning to sell within 3-5 years
  • Could invest the money at higher returns
  • Stretching your budget to afford points
  • Rates are expected to drop soon

What to Look For

  • Compare the math: Calculate your break-even point and compare it to how long you plan to stay in the home.
  • Shop multiple lenders: Different lenders offer different rates and point structures. Get quotes from at least 3 lenders.
  • Consider opportunity cost: Could that money earn more invested elsewhere, or used for a larger down payment?
  • Ask about seller concessions: In some markets, sellers may agree to pay for a rate buydown as part of negotiations.
  • Understand the terms: Make sure you're getting a permanent buydown, not a temporary one (unless that's what you want).

Get Expert Guidance

Rate buydowns can be a smart financial move—or they can tie up cash that could be used more effectively elsewhere. The right answer depends on your unique situation: your financial goals, how long you plan to stay, current market conditions, and what other options are available to you.

We recommend consulting with a Trustworthy Agent and a qualified mortgage professional before deciding whether to buy down your rate. Our team can connect you with trusted lenders who will take the time to explain your options—without the pressure tactics. Contact us to get started.

Have Questions About Buying Down Your Rate?

Our team can connect you with trusted mortgage professionals who can explain your options.

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