Mortgage Points Buydown Calculator
Find out if buying discount points to lower your mortgage rate pays off given how long you plan to stay. See the break-even month.
What Are Mortgage Discount Points?
Discount points are upfront fees paid to the lender to permanently lower your mortgage interest rate. One point equals 1% of the loan amount — so on a $350,000 loan, one point costs $3,500. Each point typically lowers the rate by about 0.25%, though the exact savings vary by lender and loan type. Source: Consumer Financial Protection Bureau (cfpb.gov). Last updated: May 2026.
When Buying Points Makes Sense
Points pay off when (1) you'll keep the loan past the break-even month — typically 60-100 months, (2) the cash going into points isn't needed for higher-return uses (paying high-interest debt, emergency fund, retirement match), and (3) you're paying with cash that's already taxed (points paid on a home purchase are tax-deductible in the year paid if you itemize, per IRS Publication 936).
Common Mistakes With Mortgage Points
The most common mistake is buying points when you'll refinance or move within 4-5 years — you don't recover the upfront cost. Another mistake: comparing points to a sunk cost rather than alternatives. If $7,000 in points saves $80/month for 30 years, that's a 13.7% effective return on the $7,000 — but only if you keep the loan. If you'd otherwise use the $7,000 to invest in an S&P 500 index averaging 10%, points still win — but barely.
Negative Points (Lender Credits) Explained
Some lenders offer 'negative points' — you accept a slightly higher rate in exchange for a credit toward closing costs. This is the opposite math: if you'll only keep the loan a short time, accepting a higher rate to avoid out-of-pocket closing costs can be the better deal. Run both scenarios before locking your rate.