Lending
Rate Locks, Points and Buydowns, Explained
How rate locks, discount points, lender credits and buydowns work, with the break-even math in words.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
What is a rate lock?
A rate lock holds your interest rate for a set period while your loan moves toward closing. The CFPB explains on its rate lock page (last reviewed May 2, 2023) that without a lock, your rate can change at any time. With one, it holds as long as you close in time and your application doesn't change.
Your Loan Estimate shows on page 1 whether your rate is locked and until when. Some lenders lock when they issue the Loan Estimate and some don't. If yours says the rate is not locked, the rate you see can still move.
How long should your rate lock be?
The CFPB's home loan toolkit (last updated July 2026) says locks are typically available for 30, 45 or 60 days, and sometimes longer. The right length depends on your closing date and how much room your timeline needs.
The trade-off is cost and risk. The toolkit warns that a lock can be expensive to extend if your closing needs more time. A lock can also keep you from better pricing if rates fall. Ask each lender whether a shorter or longer lock is available, and at what cost. On a purchase, we set the lock to match the closing date in your contract, with some room for the appraisal and underwriting.
Can a locked rate still change?
Yes, in some cases. The CFPB lists changes that can affect a locked rate:
- Your loan amount, loan type or down payment changes.
- The appraisal comes in higher or lower than expected.
- Your credit changes, for example after a new loan or a missed payment.
- The lender can't document income such as overtime or bonuses.
Not closing before the lock expires can change it too. So keep your credit steady and answer document requests fast until you close. Ask the lender, in the CFPB's words, whether there are any conditions under which your rate could still change.
Some lenders offer a float-down, which lets a locked rate move lower if the market drops. Terms vary a lot from lender to lender. If one is offered, ask what it costs, when you can use it and how far rates must fall first.
What are discount points and lender credits?
The CFPB explains both on its points and credits page (last reviewed October 19, 2023). One point equals 1% of your loan amount. You pay points at closing to get a lower interest rate.
Lender credits work the other way. You accept a higher rate, and the lender gives you money toward your closing costs. Some lender worksheets call these "negative points."
So you have three choices on any loan. Pay points for a lower rate. Take no points and no credit. Or take a credit for a higher rate. None is right for everyone. It depends on how long you'll keep the loan and how much cash you want to keep at closing.
How do you figure out if paying points is worth it?
Use the break-even point. Take what the points cost at closing. Divide it by how much they lower your monthly payment. The answer is the number of months it takes for the savings to pay you back.
For example only, not a quote: say one point on a $300,000 loan costs $3,000. Say it lowers your payment by $40 a month. $3,000 divided by $40 is 75 months, a little over six years. If you keep the loan longer than that, the points come out ahead. If you sell or refinance sooner, you paid more than you saved.
The CFPB suggests a related check. Compare total costs over your shortest, longest and most likely time in the loan. When you compare lenders, ask each for the same number of points or credits. Otherwise the offers are not comparable.
What is the difference between a permanent and a temporary buydown?
- Permanent buydown. This is paying discount points. The lower rate lasts for the whole loan. If rates fall and you refinance later, the money you paid for the points doesn't come back.
- Temporary buydown. Money set aside at closing lowers your payment for the first year or two, then the payment rises to the full rate. A seller or builder sometimes pays for it as part of the purchase terms.
With a temporary buydown, plan your budget around the full payment, not the starting one. Ask the lender three questions in writing. What is my payment in each year? What happens to unused buydown money if I sell or refinance early? Do I qualify at the full payment?
Should a seller credit go toward points or toward closing costs?
On a purchase, a seller may agree to give you a credit. You can often use it for closing costs, for points or for a temporary buydown. Each loan program limits how much a seller can contribute. For VA loans, VA.gov (page last updated October 5, 2026) caps seller concessions at 4% of the home's reasonable value, with no limit on credits toward closing costs.
Which use is smarter depends on your timeline. If you'll be in the home a long time, points may help more. If you need cash at closing, covering costs may help more. We run both in dollars so you can see. Our closing costs page covers seller credits in more detail.
How do you start comparing lock and point options?
Fill out the loan options form, or call Maggie's cell at (916) 549-3131. Maggie will show you each option with zero points, with points and with a credit. You'll see the cost at closing, the monthly payment and the break-even month for each.
Want to understand rates first? Read how mortgage rates work.
Frequently Asked Questions
How long does a mortgage rate lock last?
The CFPB says locks are typically 30, 45 or 60 days, and sometimes longer. Policies vary by lender, and extending a lock can be expensive, so match the lock to your closing date.
What is one discount point?
One point equals 1% of your loan amount, paid at closing to lower your rate. For example only, not a quote: on a $100,000 loan, one point is $1,000.
What is a lender credit?
Money from the lender toward your closing costs in exchange for a higher interest rate. It lowers your cash at closing and raises your monthly payment.
How do I know if paying points is worth it?
Divide the cost of the points by the monthly savings. The result is your break-even in months. If you'll keep the loan longer than that, points may make sense.
Can my locked rate change before closing?
Yes, if your loan amount, loan type, down payment, credit, verified income or appraised value changes, or if the lock expires before you close.
Is a temporary buydown the same as a lower rate?
No. It lowers your payment for the first year or two, then the payment rises to the full rate. Plan your budget around the full payment.
Talk to Maggie directly: cell (916) 549-3131 (text or call) · maggie@loveyoursurroundings.coMaggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307
Loans are arranged through Maggie B. Hopkins, NMLS #349517 · Surroundings NMLS #2528307. This is not a commitment to lend. All loans subject to credit approval and property qualification. Equal Housing Lender.
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