Should you pay points to buy down your rate?
Paying discount points lowers your mortgage rate for an upfront fee. Enter your loan and see the real trade: what the points cost, how much you save each month, and exactly when the savings pay you back.
The loan
Each point costs 1% of the loan and lowers your rate by the amount above. Leave the keep field at the full term to see the lifetime picture.
Do the points pay off?
When your savings catch up to the cost
Cumulative savings vs the upfront cost
Points scorecard
Side by side: no points vs points
| Measure | No points | With points | Difference |
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Mortgage points, explained
What Are Mortgage Discount Points
Mortgage discount points are prepaid interest you buy at closing to permanently lower your interest rate. Each point costs 1% of your loan amount, so one point on a $300,000 mortgage costs $3,000. In exchange, the lender reduces your rate, commonly by about 0.25% per point, though the exact buydown varies by lender and market conditions.
Buying points is essentially a bet on time. You pay more upfront to pay less every month. Whether that trade pays off depends entirely on how long you keep the loan, which is why the breakeven point matters more than the size of the discount itself.
How the Breakeven Point Works
The breakeven point is the number of months it takes for your accumulated monthly savings to equal the upfront cost of the points. You calculate it by dividing the cost of the points by the monthly payment savings. For example, if two points cost $6,000 and lower your payment by $100 a month, you break even in 60 months, or five years.
Keep the loan past the breakeven point and every remaining month is pure savings. Sell or refinance before you reach it and you lose money, because you never recovered the upfront cost. This calculator shows your breakeven in both months and years so you can weigh it against your real plans.
When Buying Points Makes Sense
Points reward patience. They tend to pay off when you plan to stay in the home and keep the same loan well beyond the breakeven point, when you have cash to spare at closing, and when rates are unlikely to fall enough to make refinancing attractive. Over a full 30-year term, even a modest rate reduction can save tens of thousands of dollars in interest.
Points rarely make sense if you expect to move or refinance within a few years, if paying for them drains your reserves, or if that cash would do more for you as a larger down payment. Always compare the net benefit over the exact number of years you realistically plan to hold the loan, not just over the full term.
Common questions
How much does one mortgage point cost?
One point costs 1% of your loan amount. On a $300,000 loan that is $3,000, and on a $400,000 loan it is $4,000. You can also buy fractional points, such as half a point, at a proportional cost.
How much does a point lower my interest rate?
It depends on the lender, but a common rule of thumb is that one point lowers your rate by about 0.25%. Some lenders offer more or less, so ask for the exact buydown and enter it in the rate reduction field for an accurate result.
What is the breakeven point on mortgage points?
The breakeven point is the cost of the points divided by your monthly payment savings. It tells you how many months you must keep the loan before the savings repay the upfront cost. After that point, the savings are yours to keep.
Are mortgage points worth it?
Points are worth it when you keep the loan past the breakeven point. If you sell or refinance before then, you lose money. Buy points only if you are confident you will hold the loan long enough for the monthly savings to add up beyond what you paid.
Estimates for planning only. Actual point pricing, rate buydowns and closing terms vary by lender and change with the market. Points may also be tax deductible in some cases. Confirm every figure with your lender before you decide.