Should I include time value of money?

This tool uses simple payback. For a more precise view, discount future savings or compare APR with/without points.

What if I refinance early?

If you expect to refinance or sell before breakeven, be cautious about paying points. Shorter locks or no buydown can preserve cash.

Is monthly savings guaranteed?

Savings depend on the rate difference between buydown and no buydown. Use lender quotes for the exact payment change.

Are buydowns tax-deductible?

Points may be deductible in some cases; consult tax guidance. This calculator does not include tax effects.

What if rates drop during the lock?

If rates fall and you float down or re-lock lower, your monthly savings input changes. Recalculate breakeven with updated rates and costs.

Should I compare to doing nothing?

Yes. If breakevens are long and cash is tight, it may be better to keep cash on hand and accept the current rate rather than pay for a buydown or lock extension.

Does a buydown affect PMI or LTV calculations?

Paying points may slightly change APR but doesn’t change your LTV. PMI thresholds rely on LTV and amortization, not on points paid. Model PMI separately if relevant.

How do lender lock policies affect this?

Lock/extension fees, float-down options, and caps vary by lender. Plug in the specific fees and potential rate changes offered to you; this tool won’t reflect lender-specific rules automatically.

finance calculator

Buydown vs Rate Lock Breakeven

Compare upfront buydown costs to shorter rate-lock extensions by looking at monthly savings breakeven points.

Results

Buydown breakeven (months): 40.00
Rate lock breakeven (months): 8.00
Cheaper option: rate_lock

How to use this calculator

Enter the buydown cost (points/fee) and the lock extension cost quoted by your lender.
Estimate the monthly payment savings from the buydown versus the higher rate without it.
Review breakeven months for each and which option is cheaper on simple payback.
If you expect to refinance or sell soon, lean toward the option with the shorter breakeven (or spend nothing).

Inputs explained

Buydown cost: Upfront cost (points/fee) to lower the rate for the loan term.
Rate lock extension cost: Fee to extend the existing rate lock to avoid repricing.
Expected monthly savings: Monthly payment reduction from the buydown vs the higher rate without it.

How it works

Breakeven months = cost ÷ monthly savings (simple payback, no discounting).

Cheaper option is the one with the lower breakeven, assuming monthly savings is positive.

This is a quick-payback comparison—it does not model how long you’ll keep the loan or discount future savings.

Formula

Buydown breakeven months = buydown cost ÷ monthly savings. Rate lock breakeven months = lock cost ÷ monthly savings. Cheaper option = lower breakeven (if monthly savings > 0).

When to use it

Deciding whether to pay points (buydown) or extend a rate lock while shopping/closing.
Comparing short-term cashflow benefits if you plan to refinance or move within a few years.
Testing whether the buydown breakeven fits your expected holding period.

Tips & cautions

If you’ll likely refinance or sell before breakeven, a buydown may not pay off; a shorter lock or no spend could be wiser.
Ask your lender to quantify the monthly savings from the buydown accurately; small rate moves can change the math.
Consider opportunity cost: cash spent on points/fees could be used for closing costs, reserves, or higher-interest debt payoff.
Model the all-in payment change (PITI/PMI) if the buydown impacts escrows/PMI thresholds.
If you’re uncertain about your timeline, lean on the shorter breakeven or keep cash flexible.
Compare APR with and without points to see the true financing cost beyond simple payback.
Assumes a single monthly savings value; does not model changing rates or time horizons.
No time value of money; uses simple payback.
Does not include opportunity cost or tax treatment of points/fees.
Does not factor future refi/prepay behavior—breakeven assumes you keep the loan that long.
Does not include lender pricing adjustments or lock/extension caps that could change costs.
Ignores impact on APR and total interest; this is a cashflow breakeven only.
Does not include PMI effects; if a buydown changes LTV/P MI triggers, model that separately.
Simple model only—does not compare alternatives like paying extra principal or waiting to lock later.
Assumes monthly savings stays constant; if escrows/PMI change, actual payment difference may vary.

Worked examples

Buydown pays off faster

Buydown cost: $6,000. Lock cost: $1,200. Monthly savings: $150.
Buydown breakeven = 6,000 ÷ 150 = 40 months. Lock breakeven = 1,200 ÷ 150 = 8 months.
Lock extension is cheaper short term; buydown only wins if you’ll keep the loan past ~3.3 years.

Short holding period favors the lock

Buydown cost: $4,000. Lock cost: $800. Monthly savings: $90.
Buydown breakeven ≈ 44.4 months; lock breakeven ≈ 8.9 months.
If you’ll refinance within 2 years, the lock (or no spend) is more rational.

Tiny savings make both unattractive

Buydown cost: $3,000. Lock cost: $1,000. Monthly savings: $20.
Buydown breakeven = 150 months; lock breakeven = 50 months.
With such low savings, neither option is compelling on cashflow; consider not paying either fee.

Refi likely within a year

Buydown cost: $5,000. Lock cost: $900. Monthly savings: $110.
Buydown breakeven ≈ 45.5 months; lock breakeven ≈ 8.2 months.
If you expect to refi in 12 months, a buydown will not pay back; an extension or float-down may be safer.

Deep dive

Use this buydown vs rate-lock calculator to compare simple breakeven months for points versus paying to extend a rate lock.

Enter buydown cost, lock cost, and expected monthly payment savings to see which option has the shorter payback.

If you expect to refinance or move soon, favor the option with the shorter breakeven—or avoid both to preserve cash.

Pair this with a full mortgage comparison (APR with/without points, total interest) for a deeper decision.

Ask your lender for exact payment deltas at each rate so your monthly savings input is accurate.

Run multiple scenarios if rates are volatile: different lock costs and payment deltas can swing the cheaper option quickly.

Consider cash priorities: emergency fund, closing costs, and reserves might matter more than a long-payback buydown.

If your lender offers float-down options, compare that to paying a new lock extension; update inputs if your rate changes.

If PMI drops at a certain LTV, combine this breakeven view with your PMI timeline to avoid overpaying for a small monthly savings delta.

When in doubt, keep cash flexible: short breakevens or no additional spend are often safer in volatile rate markets.

Remember to compare against simply waiting: if rate lock fees are high and you’re early in shopping, it might be better to wait rather than pay for extensions.

Model opportunity cost: cash spent on points or lock fees could fund reserves, repairs, or higher-interest debt payoff—ensure the payback beats your next best use of funds.

If you’re locking during a volatile period, ask about multiple lock lengths and float-down terms; plug the different costs and payment changes into this calculator to pick the best fit.

FAQs

Should I include time value of money?: This tool uses simple payback. For a more precise view, discount future savings or compare APR with/without points.
What if I refinance early?: If you expect to refinance or sell before breakeven, be cautious about paying points. Shorter locks or no buydown can preserve cash.
Is monthly savings guaranteed?: Savings depend on the rate difference between buydown and no buydown. Use lender quotes for the exact payment change.
Are buydowns tax-deductible?: Points may be deductible in some cases; consult tax guidance. This calculator does not include tax effects.
What if rates drop during the lock?: If rates fall and you float down or re-lock lower, your monthly savings input changes. Recalculate breakeven with updated rates and costs.
Should I compare to doing nothing?: Yes. If breakevens are long and cash is tight, it may be better to keep cash on hand and accept the current rate rather than pay for a buydown or lock extension.
Does a buydown affect PMI or LTV calculations?: Paying points may slightly change APR but doesn’t change your LTV. PMI thresholds rely on LTV and amortization, not on points paid. Model PMI separately if relevant.
How do lender lock policies affect this?: Lock/extension fees, float-down options, and caps vary by lender. Plug in the specific fees and potential rate changes offered to you; this tool won’t reflect lender-specific rules automatically.

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Compare your current mortgage to a refinance mid-term to see payment change, interest difference, and breakeven months on closing costs.

This tool provides a simple payback comparison for buydown versus rate-lock extension. It does not discount future savings, model APR, or account for tax treatment, prepayments, or refis. Confirm payment impacts with your lender before committing cash.