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Permanent Buydown Calculator (your note rate vs your bought-down rate)
Independent consumer calculator. Not affiliated with any government agency, lender, builder, MLS, appraisal district, tax authority, or other service provider unless expressly identified on the relevant placement.
A permanent buydown pays an upfront amount at closing — usually stated as discount points — in exchange for a lower fixed note rate for the entire life of the loan. This calculator takes the two rates from your own written scenarios, runs the same fully amortizing fixed-rate payment formula on the same loan amount and term for both, and shows the modeled payment/interest difference under these assumptions: the monthly payment at each rate, the upfront cost of the points, the break-even month (or a no-break-even state), and the total scheduled interest difference over the full term.
User-entered fixed-rate amortization math only; not an APR disclosure, rate quote, offer, advertisement, approval, recommendation, Loan Estimate, Closing Disclosure, or legal/tax result. Verify points, rate, fees, lock, loan type, and eligibility with the provider. Actual lender disclosures control.
Worked example
Worked example: a $400,000.00 loan over 360 months, comparing a user-entered 6.5% note rate with a user-entered 6% bought-down rate costing 2 points
Modeled monthly payment difference
$130.07 /month
Break-even on the upfront cost
Month 62
At the entered note rate the payment is $2,528.27 per month; at the entered bought-down rate it is $2,398.20. The 2 points cost $8,000.00 upfront, and the modeled monthly difference of $130.07 covers that cost at month 62 in this model. Over the full term, the total scheduled interest difference is $46,825.20, which nets to $38,825.20 after the upfront cost, in nominal dollars. Every figure is the modeled payment/interest difference under these assumptions — scenario arithmetic on the entered numbers, not a quoted or available term.
| At your note rate (6.5%) | At your bought-down rate (6%) | Difference | |
|---|---|---|---|
| Monthly payment (P&I) | $2,528.27 | $2,398.20 | $130.07 |
| Total scheduled interest (full term) | $510,177.20 | $463,352.00 | $46,825.20 |
| Upfront cost of points | — | $8,000.00 | -$8,000.00 |
| Interest difference minus upfront cost | — | — | $38,825.20 |
User-entered fixed-rate amortization math only; not an APR disclosure, rate quote, offer, advertisement, approval, recommendation, Loan Estimate, Closing Disclosure, or legal/tax result. Verify points, rate, fees, lock, loan type, and eligibility with the provider. Actual lender disclosures control.
Interactive
Run your own numbers
Every rate, point, and cost above is your own entry from your own written scenarios — nothing is pre-filled from any provider.
At your note rate (6.5%)
$2,528.27 /mo
Total scheduled interest $510,177.20
At your bought-down rate (6%)
$2,398.20 /mo
Total scheduled interest $463,352.00
Modeled monthly difference
$130.07
Upfront cost (points)
$8,000.00
Full-term interest difference
$46,825.20
In this model the cumulative monthly difference covers the upfront cost at month 62. Over the full term, the modeled interest difference minus the upfront cost is $38,825.20 in nominal dollars.
All figures are the modeled payment/interest difference under these assumptions — arithmetic on the numbers you typed, not a quote and not a prediction.
User-entered fixed-rate amortization math only; not an APR disclosure, rate quote, offer, advertisement, approval, recommendation, Loan Estimate, Closing Disclosure, or legal/tax result. Verify points, rate, fees, lock, loan type, and eligibility with the provider. Actual lender disclosures control.
The math
How the math works
The monthly principal-and-interest payment is M = P × r ÷ (1 − (1 + r)−n), where P is the loan amount, r is the monthly rate (annual rate ÷ 12), and n is the term in months. The same formula runs twice — once at your entered note rate and once at your entered bought-down rate — over the same loan amount and term. The upfront cost is your entered dollars, or points × loan amount ÷ 100. Total scheduled interest is the monthly payment × the term − the loan amount, in nominal dollars. The break-even month is the first whole month where the cumulative monthly payment difference covers the upfront cost; if that does not happen before the term ends, the result is a no-break-even state. All money values round half-up to cents.
Fine print
Assumptions and limitations
- Every rate, point, cost, loan amount, and term is a user-entered input from your own written scenarios. Nothing is fetched from any lender, market feed, or rate sheet, and no figure here is presented as available from anyone.
- Payments are principal and interest only — taxes, insurance, escrow, HOA dues, and mortgage insurance are excluded. Fully amortizing fixed-rate loan, same loan amount and term in both scenarios by construction.
- All differences are nominal dollars with no discounting, no prepayment, no refinance assumption, and no tax treatment. The break-even model stops at the end of the loan term.
- If the bought-down rate you enter is higher than your note rate, the calculator reports not comparable instead of a result.
- User-entered fixed-rate amortization math only; not an APR disclosure, rate quote, offer, advertisement, approval, recommendation, Loan Estimate, Closing Disclosure, or legal/tax result. Verify points, rate, fees, lock, loan type, and eligibility with the provider. Actual lender disclosures control.
Important: This independent consumer calculator provides estimates for education and comparison only. It is not a lender, mortgage broker, builder, real estate broker, appraiser, tax professional, attorney, financial adviser, or government agency, and it is not an offer, quote, approval, commitment, Loan Estimate, Closing Disclosure, appraisal, inspection, or other legal or financial document. Results are not a guarantee of savings, payment, qualification, price, availability, or outcome. Verify all figures, terms, eligibility, fees, taxes, HOA/MUD/PID charges, incentives, construction terms, and provider disclosures with the relevant provider and a qualified professional before relying on them. We do not provide legal, tax, mortgage, lending, or investment advice.
Answers
Frequently asked questions
What is a permanent buydown?
A permanent buydown means paying an upfront amount at closing — usually stated as discount points — in exchange for a lower fixed note rate for the entire life of the loan. Because the note rate itself is lower, every scheduled principal-and-interest payment for the full term is lower than it would be at the higher rate. This calculator compares the two fixed-rate scenarios you enter from your own written figures.
How is a permanent buydown different from a temporary buydown?
A temporary buydown (such as a 3-2-1 or 2-1) reduces the payment only for the first one to three years, funded from an escrow account, while the note rate itself never changes. A permanent buydown changes the note rate for the whole term: the lower payment lasts the life of the loan, and the upfront cost is the points paid at closing. The two structures answer different questions, which is why they are separate calculators on this site.
What is a discount point?
A discount point equals one percent of the loan amount, paid at closing in exchange for a lower rate. Two points on a $400,000 loan is $8,000. How much one point changes the rate is set by the lender and market conditions on a given day and appears in your own written figures — this calculator does not assume any point-to-rate ratio, it only converts the points you enter into dollars.
What does the break-even month mean?
The bought-down scenario starts behind by the upfront cost you entered and gains ground by the modeled monthly payment difference. The break-even month is the first whole month in this model where the cumulative payment difference covers that upfront cost, in nominal dollars. If that never happens before the loan term ends — for example, when the rate difference is very small relative to the cost — the calculator reports no break-even instead of a number.
Where should the rate and points figures come from?
From your own written scenarios — the figures a provider has put in writing for you, such as a Loan Estimate. The CFPB explains that a Loan Estimate is the standardized document showing the rate, points, and costs for a specific application. This calculator does not know, fetch, or publish any actual rate; it only runs amortization arithmetic on the two scenarios you type in, and the written documents control.
References
Sources
- Consumer Financial Protection Bureau — Loan Estimate explainer (the standardized document where actual rate, points, and cost figures appear)
- Consumer Financial Protection Bureau — What are discount points and how do they work?
These sources explain the concepts and the official documents. They do not supply any rate, and this calculator does not reproduce or replace the documents they describe.
Updated 2026-08-17.
Worksheet
Take it to your next meeting
The printable Permanent Buydown Decision Pack packages your two scenarios into a full amortization table plus a question checklist for the conversation with your provider — where to record each written figure and its date, what to ask about points, lock, and fees, and space to note what is put in writing. The pack carries the same scope language shown above.
Disclosure: We may receive a flat fee or commission if you use some links or offers on this page. This does not change the calculator result. You are not required to use any listed provider.
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