: Each point is equal to 1% of your principal loan.
💡 : Buying points is essentially a bet that you will keep the loan for longer than the break-even period. When It Makes Sense Everything You Need to Know About Mortgage Discount Points cost to buy down points on a mortgage
: You can usually buy fractional points (e.g., 0.5 points) or multiple points (e.g., 2.0 points). Calculating the "Break-Even" Point : Each point is equal to 1% of your principal loan
: One point generally reduces your interest rate by 0.25% (25 basis points), though this varies by lender. Calculating the "Break-Even" Point : One point generally
Buying down "points" (discount points) on a mortgage is a strategy to lower your interest rate by paying a lump sum upfront at closing. As of April 2026, the standard cost for one mortgage point remains . Cost and Rate Impact
Break-Even (Months)=Cost of PointsMonthly SavingsBreak-Even (Months) equals the fraction with numerator Cost of Points and denominator Monthly Savings end-fraction Example Scenario For a mortgage at a 7% interest rate: Cost of 1 Point : $3,000 (1% of $300k). New Rate : 6.75% (0.25% reduction). Monthly Savings : Approximately $50. Break-Even : $3,000 \div $50 = 60 months (5 years) . Strategic Considerations