- One mortgage point costs 1% of the loan and typically buys the rate down by about 0.25 points; the breakeven is the cost divided by the monthly savings.
- Points pay only if you keep the loan longer than the breakeven, often 4 to 7 years; sell or refinance sooner and they lose money.
- With rates elevated and many loans refinanced within a few years, the breakeven often outlasts the loan, so the cash is frequently better spent elsewhere.
A lender offers to lower your rate if you pay a little more upfront. It sounds like a discount, and sometimes it is. But mortgage points are really a bet: you pay now to save monthly, and you only come out ahead if you keep the loan long enough for the savings to repay the cost. With today's 30-year rate at 6.72%, that bet deserves the same arithmetic as any other. Rates on this page were last verified recently.
The good news is that the math is one division, and it tells you plainly whether points are worth it for your situation or quietly cost you.
What a point is, and what it buys
One point costs 1% of your loan amount and typically lowers your rate by about 0.25 percentage points. On a $400,000 loan, one point is $4,000. The exact buydown varies by lender and by day, so the only reliable way to know is to ask for the payment with and without points, not to assume a fixed ratio.
That gives you the two numbers the decision needs: what the points cost, and how much they lower your monthly payment.
The breakeven, in one division
Breakeven (months) = point cost ÷ monthly savings.
Work a real example. Suppose two points on a $400,000 loan cost $8,000 and lower your payment by $115 a month. The breakeven is $8,000 divided by $115, about 70 months, just under six years.
That number is the whole answer. Keep the loan longer than the breakeven and the points pay, every month after is pure savings. Sell or refinance sooner and the points lose, you never recouped the upfront cost. It is the same shape as the CD early-withdrawal breakeven: an upfront cost measured against a stream of monthly savings.
Run your own number
- Point cost: each point is 1% of your loan amount.
- The two payments: ask the lender for the monthly payment with and without points.
- Monthly savings: the higher payment minus the lower one.
- Breakeven: point cost divided by monthly savings.
- Compare: longer expected hold than the breakeven means points pay.
Plug in your own point cost and monthly savings with the mortgage points calculator below, or compare lenders first at SwitchWize's mortgage page to get a real quote with and without points.
Should you pay discount points to buy down your mortgage rate?
Standard rate — no points paid
Reduced rate after buying discount points
Break-Even (months)
2y 9m
Use this result as one input in your broader Money Map, not as a one-off number.
What to do
Use this result to narrow your next financial move.
Pre-tax estimates. For illustration only — not financial advice.
Why points often lose in 2026
The breakeven is frequently 4 to 7 years. The trouble is that many borrowers do not keep a loan that long. People move, and anyone who buys at today's elevated rates may refinance the moment rates fall, resetting the loan and throwing away the unrecovered point cost. If there is a real chance you sell or refinance before the breakeven, the cash is usually better spent on a larger down payment or simply kept liquid.
Points make the most sense when you are confident you will hold the loan and the rate for a long time, and when you have cash beyond your down payment and reserves.
Today's rate environment adds context to that bet: 30-year rates have moved in a wide band over the past two years, which is exactly why the breakeven math matters more than the sticker rate.
Should you buy points? A quick decision guide
| Your situation | Move | Why it fits |
|---|---|---|
| Staying 7+ years, cash beyond your down payment and reserves | Buy points | The breakeven clears with room to spare |
| Staying 4-6 years | Run your own breakeven first | Could go either way depending on the exact quote |
| Might sell or refinance within 3 years | Skip points | You will not recoup the upfront cost in time |
| Tight on cash for closing | Skip points | Put the cash toward the down payment instead |
Quick answers
Are points worth it in 2026? Only if you keep the loan longer than the breakeven, the point cost divided by the monthly savings, often 4 to 7 years.
How do I calculate the breakeven? Divide what the points cost by the monthly payment they save. $8,000 saving $115 a month is about a 70-month breakeven.
Points or a bigger down payment? Often the down payment or liquid cash wins, since points only pay if you hold the loan past the breakeven.
Sources
The IRS treats mortgage points as prepaid interest, which affects whether and how you can deduct them; see IRS Publication 936 on the home mortgage interest deduction for the current rules. For general guidance on comparing loan estimates and understanding upfront costs, see the Consumer Financial Protection Bureau's explainer on mortgage points.
Methodology
Point pricing and the rate buydown per point vary by lender and day; always compare the actual payments quoted with and without points. SwitchWize tracks mortgage rates daily from lender disclosures and regulatory data. Dollar and percentage figures are illustrative. This is educational information, not personalized financial advice.
Frequently Asked Questions
Are mortgage points worth it in 2026?
How do I calculate the mortgage points breakeven?
How much does one mortgage point cost and save?
Is it better to buy points or make a bigger down payment?
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