Loan details
The basics of your mortgage.
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Rate buydown
The points cost and any seller contribution.
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pts
1 pt = 1% of loan = 0.25% rate cut
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Auto-syncs with points (above)
Net Cost To Buyer
$4,000
$4,000 points
− $0 seller credit
Monthly Savings
$66/mo
Break-Even
5.0 yrs
Lifetime Savings
$19,886
Without Buydown 7%
$2,661
P&I per month
Total / mo$3,286
Total interest$558,036
With Buydown 6.75%
$2,594
P&I per month
Total / mo$3,219
Total interest$533,931
It's like buying it for…
at 7% rateSticker
$500,000
→
Effective
$489,964
Like getting $10,036 off the price.
Break-even
60 mo of 360Recoup $4,000 in about 5.0 years. Stay longer and you come out ahead.
Buydown vs Sales Price Reduction
Same dollars going into closing — which one actually saves you more?
Apples to Apples
Comparing $4,000 either way
Price Reduction
6.50%
Cut the price by $X instead
Sales Price$496,000
New loan amount$396,000
Monthly P&I$2,503
Buyer cash at close$0
Total interest paid$505,011
Lifetime cost (loan + cash)$901,011
Buydown
6.25%
Pay $X to buy down the rate
Sales Price$500,000
Loan amount$400,000
Rate6.25%
Monthly P&I$2,463
Buyer cash at close$4,000
Total interest paid$486,651
Lifetime cost (loan + cash)$890,651
Buydown wins by $10,360 over the life of the loan and saves $40/mo right now.
Comparison assumes the seller credit + your points are reallocated as a one-for-one price cut.
Down payment percentage is held constant. Property tax shifts with the new price.
| Standard Loan | With Price Reduction | With Buydown | It's Like Buying At | |
|---|---|---|---|---|
| Sales Price | $500,000 | $496,000 | $500,000 | $489,652 |
| Buyer Cash to Close | $0 | $0 | $4,000 | $0 |
| Loan Amount | $400,000 | $396,000 | $400,000 | $391,722 |
| Note Rate | 6.500% | 6.500% | 6.250% | 6.500% |
| Term (months) | 360 | 360 | 360 | 360 |
| Monthly P&I | $2,528 | $2,503 | $2,463 | $2,463 |
"It's Like Buying" shows the equivalent sales price at your original rate that produces the same monthly P&I as the buydown. In this scenario, the buydown's monthly cost is what you'd pay on a smaller home at the higher rate, with the same down payment dollars.
Monthly payment breakdown
Where every dollar of your payment goes (with buydown).
$3,219
Per Month
Cumulative savings over time
When the buydown pays for itself, and what you net keeping the loan.
Loan balance over time, with and without the buydown
A lower rate means a slightly faster payoff, even at the same monthly payment level.
Loan details
Note rate, term, and loan amount, exactly like your loan estimate.
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Defaults to loan amount (e.g. for DPA / 0% down)
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%
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Auto-calculated from rate, term, and loan amount.
Choose your Payment Reduction Plan
Lower the buyer's payment in the early years using a one-time seller (or lender) credit. Standard IPC limits apply.
How it works:
The seller (or lender) deposits a one-time subsidy into a custodial buydown account.
Each month, that account chips in the difference between your full note payment and the
temporarily reduced payment. After the buydown period, you pay the regular note rate for
the rest of the loan. You can refinance any time, and any unused subsidy
is applied to your principal.
Buydown Subsidy (Total Cost)
$10,690.68
The amount the seller (or other party) needs to credit at closing to fund the
2-1 Payment Reduction Plan.
| Period | Effective Rate | P&I Payment | You Save / mo |
|---|
Total Buyer Savings During Buydown Period
$10,690.68
Year-1 Monthly Savings
$588.77
Year-1 Effective Payment
$2,340.02
Payment Reduction Plan vs Sales Price Reduction
Should the seller spend their credit on a payment subsidy, or just cut the price? Here's the math.
Apples to Apples
Comparing $10,691 either way
Price Reduction
6.250%
Seller cuts the price by the same amount
New loan amount$464,980
Note rate (unchanged)6.250%
Year-1 P&I$2,863
P&I for life of loan$2,863
Seller cost (credit)$10,690.68
Total interest paid$565,724
Buyer's lifetime cost$1,030,704
Buydown
2-1 Plan
Seller funds the Payment Reduction Plan
Loan amount$475,671
Note rate6.250%
Year-1 P&I (effective)$2,340.02
P&I after buydown$2,928.79
Seller cost (subsidy)$10,690.68
Total interest paid$578,693
Buyer's lifetime cost$1,054,364
Price reduction wins by $23,660 over the life of the loan, but the Payment Reduction Plan saves you $523/mo in year one when cash flow matters most.
The temporary buydown helps cash flow in early years; a price cut helps every year. The right answer depends on whether you'll refinance, how long you'll stay, and how much breathing room you need now.
| Standard Loan | With Price Reduction | With Payment Reduction Program | It's Like Buying At | |
|---|---|---|---|---|
| Sales Price | $475,671 | $464,980 | $475,671 | $380,302 |
| Buyer Cash to Close | $0 | $0 | $0 | $0 |
| Loan Amount | $475,671 | $464,980 | $475,671 | $380,302 |
| Note Rate (Year 1) | 6.250% | 6.250% | 4.250% | 6.250% |
| Term (months) | 360 | 360 | 360 | 360 |
| Monthly P&I | $2,929 | $2,863 | $2,340 | $2,340 |
"It's Like Buying" shows the equivalent sales price at the full note rate that produces the same Year-1 P&I as the Payment Reduction Program. After Year 1 (or the buydown period ends), the borrower's payment steps up to the full note rate; the price-reduction option keeps that lower payment for life.
Payment by year
How your monthly P&I steps up during the buydown period.
Subsidy by year
How the one-time seller credit gets spent over the buydown period.
$10,691
Total Subsidy
Cumulative buyer savings
Every dollar saved during the buydown period, month by month, building toward your total subsidy.
Ready to turn these numbers into your plan?
Run a real scenario with your credit, income, and the actual seller credit you can negotiate. I'll show you exactly which option (permanent buydown, temporary Payment Reduction Plan, or neither) gets you the lowest cost of homeownership over the time you'll actually live there.
For Demonstration Purposes Only
Important: Payment examples shown in the comparison cards reflect Principal & Interest (P&I) only. They do not include property taxes, homeowner's insurance, HOA dues, mortgage insurance (MI), private mortgage insurance (PMI), or any other escrowed amounts. Your actual total monthly housing payment will be higher.
This calculator is for illustrative purposes only and does not represent an offer to lend, a rate
lock, a commitment to lend, or a pre-qualification. All calculations are estimates and do not
constitute a loan offer. Actual rates, payments, fees, and terms vary based on creditworthiness,
loan type, property type, occupancy, market conditions, and other factors. Standard Interested
Party Contribution (IPC) limits apply to temporary buydown subsidies; your loan may not qualify
if the subsidy exceeds the allowable IPC. Sit down with Ken Clark Jr., a licensed loan originator,
to confirm your scenario.