Mortgage Points Buy-Down Calculator 2026
Analyze whether paying discount points upfront to reduce your interest rate is worth it in 2026. Compare the cost of points against monthly savings to find your break-even month.
Loan Details
Points Cost
$6,400
2 point(s) × 1% × $320,000
Mortgage Points: When to Buy Down Your Rate in 2026
When you get a mortgage quote, the lender will often offer you a seemingly fantastic low interest rate. But read the fine print: that rate usually requires you to pay "Discount Points." A discount point is a massive upfront cash fee you pay the bank in exchange for a permanently lower interest rate. Our calculator forces you to do the one thing the bank hopes you won't do: calculate the exact Break-Even Point.
The Mathematics of a Mortgage Point
The math behind discount points is very strict.
- 1 Point = 1% of your total loan amount.
If you are taking out a $400,000 mortgage, buying 1 point will cost you exactly $4,000 in cash at closing. In exchange for handing the bank $4,000, they will permanently lower your interest rate (usually by 0.25%).
The Break-Even Calculation
Assume your loan is $400,000.
Scenario A (No Points): You get a 6.5% rate. Your monthly payment is $2,528.
Scenario B (Buy 1 Point): You pay $4,000 cash upfront to get a 6.25% rate. Your new monthly payment is $2,462.
By paying $4,000, you save exactly $66 a month.
To find your Break-Even Point, divide the upfront cost by the monthly savings: $4,000 / $66 = 60 Months (5 Years).
The Ultimate Question: How Long Will You Stay?
The Break-Even Point is the most important number in this calculation. If your break-even point is 5 years, you must not sell the house or refinance the loan for at least 5 years.
If you buy the points, and then interest rates drop in Year 3 and you decide to refinance, you just lost thousands of dollars. You never recovered the upfront cash you gave the bank.
Rule of Thumb: Only buy discount points if you are mathematically certain you will keep the exact same mortgage for at least 2 years beyond the break-even date.
Discount Points vs. Origination Points
When reviewing your Loan Estimate document, be incredibly careful not to confuse the two types of points:
- Discount Points: These are optional. You pay money to lower your interest rate.
- Origination Points (or Fees): This is just the bank charging you a fee for doing the paperwork to create the loan. This does not lower your interest rate. It is pure profit for the lender. Always negotiate to have origination fees removed or reduced.
Seller Concessions (The Best Way to Buy Points)
In a buyer's market, the absolute best way to use discount points is to have the seller pay for them.
When negotiating the purchase of the home, you can ask the seller for a "$5,000 credit toward closing costs." You then take that $5,000 and use it entirely to buy down your interest rate. You get the permanent benefit of a lower monthly payment, but you didn't have to use your own cash to achieve it. Your break-even point is essentially Day 1.
Compare Full Loan Scenarios
If you want to view the full amortization schedules of the "No Points" vs "Points" scenarios side-by-side to see the exact lifetime interest savings, use our Loan Comparison tool.
Go to Advanced Loan ComparisonMortgage Points — Frequently Asked Questions
What is a mortgage discount point?
A discount point is an optional upfront fee you pay the bank at closing to permanently lower your interest rate. One point costs exactly 1% of your total loan amount (e.g., 1 point on a $300,000 loan costs $3,000).
What is the Break-Even Point?
The Break-Even Point is the exact month where the accumulated monthly savings from the lower interest rate finally equal the upfront cash you paid to buy the points. If your break-even point is 5 years, you must stay in the house (without refinancing) for more than 5 years for the points to be a good investment.
Should I buy points in a high interest rate environment?
Usually, no. If rates are currently high, most buyers plan to refinance within 2 to 3 years when rates inevitably drop. If you buy points today, but refinance in 2 years, you will not reach your break-even point, meaning you threw that upfront cash away.
Continue your financial research
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Illustrative comparison scenarios
| Upfront cost | Monthly saving | Simple break-even |
|---|---|---|
| $2,000 | $200 | 10 months |
| $3,000 | $200 | 15 months |
| $4,000 | $200 | 20 months |
| $5,000 | $200 | 25 months |
| $6,000 | $200 | 30 months |
Educational scenarios, not quotes, approvals, investment forecasts or tax advice. See methodology and limitations.