Tool · Buydown vs. Price Cut
Rate buydown, or the same dollars off the price?
A temporary buydown lowers your early payments but leaves total interest untouched; a price cut shrinks the balance you finance. This tool spends the same sum both ways and shows exactly what each buys — it never tells you which to pick.
Default assumptions & where they come from
Every pre-filled figure below is editable. Example inputs (home price, income) are illustrations, not data; the assumptions listed here stand in for real-world statistics, so each carries its public source.
- Note rate: 6.5% (30-year fixed)Editable. Near the Freddie Mac PMMS 30-year average at verification; the live figure is on the Fee & Rate Index.
- Permanent buydown cost: $7,650 (≈2 points)By definition one discount point costs 1% of the loan; the default is two points on the example $382,500 loan. The rate reduction per point varies by lender and day.
Your scenario
A fixed sum is on the table — usually a seller credit. Spend it to buy down the rate, or take it as a price cut. We compare both against no credit at all.
$42,500 · loan $382,500
Permanent buydown
Ask your lender for the exact rate/point quote — it varies daily.
The points cost — this is the same sum applied as a price cut in the comparison.
Side by side
No credit
Buydown
Price cut
- Loan amount
- $382,500
- $382,500
- $374,850
- Rate
- 6.50%
- 6.00%
- 6.50%
- Monthly P&I — year 1
- $2,418
- $2,293
- $2,369
- Total interest (term)
- $487,858
- $443,081
- $478,102
Same $7,650, two uses
- Total interest — price cut vs. buydown
- +$35,021
- Borrower's lifetime P&I — buydown
- $825,581
- Borrower's lifetime P&I — price cut
- $852,952
Over the loan, the price cut costs more
$27,371
That's the difference in the borrower's lifetime principal & interest between taking the permanent (points) buydown and taking the same $7,650 as a price cut, over a 30-year loan. A buydown lowers early payments; a price cut lowers the balance you finance. Which fits your plans is your call — this only shows the math.