How much rate can I buy?

Up to two points total on the current sheet, at a quarter point per 25 basis points.

Can points be financed?

They can be paid from proceeds where leverage allows, which raises the balance.

Are points tax-deductible?

Treatment differs for investment property and by circumstance — confirm with your CPA.

Does a buydown change my DSCR?

Yes, slightly, because the payment falls. Occasionally enough to change a band.

Is a lender credit available instead?

Sometimes, in exchange for a higher rate. Ask the desk what the sheet supports.

LESSON 3 OF 64 MIN READ

Is it worth paying points to buy down the rate?

A buydown trades cash today for a lower payment every month, and the whole question is how long you hold the loan. On Silt's sheet a quarter of a point buys 25 basis points, up to two points total, which on a $300,000 loan costs $750 for roughly $48 a month — a break-even a little over fifteen months. If you will hold well past break-even, points usually win; if you might sell or refinance inside two years, they usually do not.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

The arithmetic, in three lines

Cost of the buydown divided by the monthly payment saving gives the break-even in months. Hold past it and the buydown is profitable; sell or refinance before it and you have given the money away. That is the whole calculation — everything else is a refinement. Do it on the payment saving, not on the interest saving, because the payment is what your cash flow feels.

Two refinements that matter

First, a lower payment lowers PITIA, which raises DSCR — occasionally enough to cross a pricing band and buy a second rate improvement you did not pay for. Second, cash spent on points is cash not spent on the down payment or on the next deal, so the honest comparison is against your own next-best use of capital rather than against zero. An investor with a pipeline should be slow to buy rate.

Points versus a bigger down payment

Both use cash to lower the payment. A larger down payment reduces the balance and may drop you into a better leverage band, improving the rate as well; a buydown reduces the rate directly and leaves the balance alone. On a file sitting just above a leverage band edge, the down payment usually wins. On a file already comfortably inside a band, the buydown usually does. Run both.

Why the prepayment term is part of the answer

A five-year step-down penalty makes an early refinance expensive, which means you are likely to hold the loan — which makes a buydown more likely to pay off. Conversely, if you have paid 87.5 basis points to remove the penalty because you intend to exit early, buying rate down for a loan you plan to retire is working against yourself. The two choices should be made together, not separately.

Origination is not a buydown

The standard one point of origination is the cost of doing the loan and buys nothing. Discount points are voluntary and buy rate. Broker compensation, where a broker is involved, is a third thing again and is disclosed separately. When comparing lenders, separate the three — a quote showing 'one point' can mean any of them, and the loans are not comparable until you know which.

Negative points and lender credits

The trade runs both ways: accepting a higher rate can generate a credit toward closing costs, which is useful when cash to close is the binding constraint rather than monthly cash flow. It is the same arithmetic in reverse, with the same break-even logic. Availability varies by lender and by program; ask the desk what the sheet supports before assuming it.

Break-even on a $300,000 loan

Base rate	7.000% · payment $1,996
Buy down 0.50% for 0.50 point	$1,500 cost
New rate	6.500% · payment $1,896
Monthly saving	$100
Break-even	15 months
Held 5 years — net saving	≈ $4,500
Sold at 18 months — net saving	≈ $300
DSCR effect at $2,900 rent, $600 fixed	1.12 → 1.16

Buydown pricing on the current sheet is a quarter point per 25 basis points, capped at two points. Illustrative only.

WHAT WE NEED FROM YOU

Proof of funds. Points are paid at closing and count toward cash to close.
Your hold plan. The break-even is meaningless without it.

FREQUENT QUESTIONS

How much rate can I buy?: Up to two points total on the current sheet, at a quarter point per 25 basis points.
Can points be financed?: They can be paid from proceeds where leverage allows, which raises the balance.
Are points tax-deductible?: Treatment differs for investment property and by circumstance — confirm with your CPA.
Does a buydown change my DSCR?: Yes, slightly, because the payment falls. Occasionally enough to change a band.
Is a lender credit available instead?: Sometimes, in exchange for a higher rate. Ask the desk what the sheet supports.

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