Mortgage points (also called discount points) let you pay cash upfront for a lower interest rate. One point costs 1% of your loan and often cuts the rate by around 0.25%, though it varies by lender. Points only pay off if you keep the loan long enough.
Mortgage points break-even calculator
Find out how long it takes for buying points to pay off.
One point costs 1% of the loan. How much it lowers your rate varies by lender, so check your Loan Estimate for the real figure.
Estimates for education only. Rates and costs vary; confirm with a licensed lender.
When buying points makes sense
- You expect to stay in the home and keep the loan for many years.
- You have extra cash after your down payment, closing costs and emergency fund.
- The seller is paying for them through a seller credit.
When to skip them
- Rates are high and you might refinance if they drop. With 30-year rates at 7.4% in October 2026, that's a real possibility.
- You'd have to cut your down payment or savings to afford them.
- You might move within 5 years.
Points vs. a bigger down payment
Putting the same cash toward your down payment lowers your loan amount instead. Below 20% down, it can also cut your PMI. Run both through the calculator to see which saves more each month.
Want the full picture? Module 6 explains how to read points and lender credits on your Loan Estimate. See the HomeLooker course.
Educational content only, not financial advice. Rates quoted are the Freddie Mac weekly average as of October 8, 2026; confirm current figures with a licensed lender.
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