Calculate the cost to buy down a mortgage rate across different terms and amortizations. See how cashback affects the client's effective rate.
Buydown Cost
Per term comparison
Effective Rate
After cashback analysis
Multi-Term View
1 to 5 year comparison
Enter the mortgage amount and rates to see buydown costs across all terms.
Enter cashback amount to see the client's effective rate
Cost difference across all terms for selected amortization
Rate Reduction
0.50%
from lender rate to target rate
5-Year Buydown Cost
$0
total interest difference over term
Effective Rate (5-Year w/ Cashback)
—
client's true cost of borrowing
Apply Cashback to Principal
The client receives cashback and applies it directly to the mortgage principal on day 1, reducing the outstanding balance.
Same Payment, Smaller Balance
The contractual payment stays the same, but now it's applied against a smaller balance — more goes to principal each month, compounding savings.
Solve for Effective Rate
Find the rate that, on the original principal, would produce the same total interest — that's the client's true effective borrowing cost.
A rate buydown is when a mortgage broker uses part of their commission to reduce the interest rate offered to the client. The "cost" is the difference in monthly payments (or total interest) between the original lender rate and the bought-down rate over the term.
When a broker gives the client a cashback, the client can apply it directly against the mortgage principal on day 1. This reduces the outstanding balance, meaning a larger portion of each subsequent payment goes to principal rather than interest — the savings compound over the entire term.
It depends on the term. A buydown saves more on longer terms because the reduced rate compounds over more months. Cashback is an immediate benefit. Use this calculator to compare both scenarios — if the effective rate with cashback is lower than the bought-down rate, cashback may be more beneficial.
Yes. A longer amortization means lower monthly payments but a larger portion of each payment goes to interest, so the total interest difference between the two rates over the term is greater — making the buydown cost higher. A shorter amortization reduces the buydown cost because you pay down principal faster.
Our team can help you optimize your commission split between buydowns and cashback for the best client outcome.
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