Where our numbers come from
Rates: The starting rate is Freddie Mac's weekly average for the week of Oct 8, 2026, shown as published. It's only a starting point. Put in the rates from your Loan Estimate.
Payments: Principal and interest on the full loan and term, at each year's rate. Taxes and insurance aren't included here.
Points: One point costs 1% of the loan. The rate you get for it is up to your lender, so the starting “rate with points” is only an example.
Worked example: a 2-1 buydown on $225,000
At a 7.40% note rate for 30 years, the full payment is $1,557.85. A 2-1 buydown makes year 1 $1,263.44 and year 2 $1,407.39. The fund that covers the difference is $5,338.52. A 3-2-1 starts at $1,126.71 and costs $10,512.23.
How a temporary buydown works
In a 2-1 buydown, year 1 is figured at 2 points below the note rate and year 2 at 1 point below. From year 3 you pay the full note-rate payment. A 3-2-1 adds a third year, and a 1-0 covers only year 1. The rate on the loan itself never changes.
Someone pays the difference up front: the seller or builder as a concession, or you. Make sure you can afford the full payment, because that's what you pay once the buydown ends.
Related: What a builder-paid buydown is worth on a new house →
How discount points work
A point is a fee of 1% of the loan, paid at closing for a lower rate on the whole loan. The break-even is how many months of lower payments it takes to earn the fee back.
Say one point ($2,250) drops the rate from 7.40% to 7.15%. The payment falls by $38.19 a month, so it breaks even after 59 months. Keep the loan 10 years and you're $2,333 ahead.
Buydown or points?
A buydown helps only in the first years. Points lower the payment for as long as you keep the loan. If you expect to refinance when rates fall, a seller-paid buydown costs you nothing, while points you paid are lost when you refinance. For the full payment with Oklahoma tax and insurance, use the mortgage calculator.
Related: A loan officer the site owner recommends →
Questions
How much does a 2-1 buydown cost?
The fund equals the payment savings over the two discounted years. On $225,000 at 7.40% for 30 years, that's about $5,339.
Does a buydown change my interest rate?
No. The note rate stays the same. The fund covers part of each payment in the first years, and then you pay the full note-rate payment.
What happens to the buydown if I refinance or sell early?
Ask your lender. It depends on the loan's terms, so check your loan documents before you count on getting anything back.
How do I figure the break-even on points?
Divide the cost of the points by the monthly savings and round up. If you keep the loan longer than that many months, the points saved you money.
Where does the starting rate come from?
Freddie Mac's Primary Mortgage Market Survey national average for the week of Oct 8, 2026, shown as published. Replace it with your quote.
Sources
- Freddie Mac, Primary Mortgage Market Survey® history (CSV) (Oct 8, 2026; retrieved Oct 8, 2026)
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