Decide whether buying discount points makes financial sense. See your exact break-even timeline and total savings over any holding period.
Dark line = no points · Green line = with points · Crossover = break-even
Determine whether buying discount points makes financial sense for your situation.
Input the mortgage amount and the base interest rate your lender is offering before any points are applied.
Select how many discount points you're considering. Each point typically costs 1% of the loan amount and reduces the rate by about 0.25%.
Enter how many years you plan to stay in the home or keep the mortgage. This is crucial — the longer you stay, the more you benefit from buying points.
Review the break-even timeline, total savings, and monthly payment reduction. The chart shows when buying points starts paying off compared to keeping your original rate.
One discount point costs 1% of your loan and typically reduces your rate by 0.20–0.25%. The question is always: will you stay long enough to recoup the upfront cost?
If your break-even is 4 years and you plan to stay 10+, buying points is a clear win. If you might sell or refinance in 3 years, skip them.
On a $350,000 loan, 1 point = $3,500 upfront. It typically buys 0.25% off your rate — saving ~$58/month on that loan.
Divide the point cost by your monthly savings. That's how many months until the points pay for themselves.
Run both scenarios. Sometimes a larger down payment saves more in PMI and interest than the same cash spent on points.
Discount points on a primary home purchase are typically fully deductible in the year paid. Consult a tax advisor for your situation.