Cost of a permanent rate buydown vs. long-term savings.
Permanent rate buydown
Is financing a 3% price increase to buy down the rate worth it?
Enter the loan details and both rates below. This models a permanent buydown funded by raising the sales price 3% — the extra amount is rolled into the loan and financed at the lower rate for the life of the loan. We weigh the bigger loan balance that creates against the monthly payment savings it buys, factoring in program-specific mortgage insurance for Conventional, FHA, VA, USDA, and Non-QM loans.
Loan Details
Loan amount, program, and term drive the MI/funding-fee factor.
Conventional: as low as 3% down (20%+ avoids PMI entirely).
Override with an exact PMI quote (%/year)
FHA charges a flat 1.75% upfront MIP (UFMIP) plus an annual MIP based on term, LTV, and base loan amount — both applied automatically below.
VA loans never carry monthly mortgage insurance — only the one-time funding fee shown below.
USDA charges a flat 1.00% upfront guarantee fee plus a 0.35%/year annual fee (FY2026), applied automatically below. The annual fee never cancels.
Non-QM programs have no standardized MI requirement — leave at $0 unless your investor's guidelines charge one.
Rate & Buydown
Compare the par rate to the permanently bought-down rate.
Defaults reflect the Freddie Mac PMMS 30-year average as of mid-July 2026 — overwrite with your live rate sheet.
Use an exact extra loan amount instead of the % increase above
Model: the sales price is raised to cover the seller-funded permanent buydown, so this amount is rolled into the loan and financed at the lower buydown rate — not paid in cash at closing.
1 yr7 years30 yrs
Loan Amount Comparison
Without the plan, the loan stays at the original amount at the higher (current/par) rate. With the plan, the price — and the loan — goes up by the amount above, financed at the lower buydown rate.
Loan Amount — Without 3% Plan$0
Loan Amount — With 3% Plan$0
Monthly Payment Comparison
P&I — Without 3% (Higher Rate)$0
P&I — With 3% (Lower Rate)$0
Monthly Payment Difference$0
Rate Reduction0.000%
Monthly MI/Funding — Without$0
Monthly MI/Funding — With$0
Full Payment — Without (P&I+MI)$0
Full Payment — With (P&I+MI)$0
Upfront MI/Funding Fee — Without$0
Upfront MI/Funding Fee — With$0
Cost vs. Savings
The extra amount financed doesn't disappear — it's a bigger loan balance that has to be carried and eventually paid down or off. Net benefit nets the payment savings against that extra remaining balance at any point in time.
Extra Amount Financed$0
Breakeven Point—
Extra Balance Still Owed (Yr 7)$0
Cumulative Payment Savings (Yr 7)$0
Net Benefit by Year 7$0
Lifetime Net Benefit (full term)$0
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Enter loan details to see the verdict.
$0
Net position ($) Time in home Breakeven year
Year
Cumulative Payment Savings
Extra Balance Still Owed
Net Position
Net position = cumulative payment savings minus the extra loan balance still owed on the bigger, 3%-financed loan. It turns positive once the payment savings have made up for the larger balance — that row is the breakeven year. The highlighted row further down marks the client's expected time in home.
Loan Program Snapshot
Mortgage insurance / funding-fee factors currently applied for this loan type and LTV.
Sources: Conventional PMI bands — MGIC BPMI/LPMI rate card.
FHA UFMIP/Annual MIP — FHA.com.
VA funding fee — VA.gov.
USDA guarantee/annual fee (FY2026) — USDA Rural Development.
Rate defaults — Freddie Mac PMMS, week of July 16, 2026.
Figures are general market estimates for planning purposes — verify against your investor rate sheet and MI quote before presenting final numbers to a client.
