Mortgage Points Explained — Should You Buy Them in 2026?

A "point" is 1% of your loan amount paid upfront in exchange for a lower interest rate — typically 0.25% lower per point. The lender's term is "discount point." It's a way to buy down your rate.

The math is simple. The question of whether to DO it is more nuanced.

The break-even math

On a $600,000 loan, one point costs $6,000 upfront and might drop your rate from 6.875% to 6.625%. That's about $95/month less in payment.

`` Break-even months = $6,000 ÷ $95 = 63 months (5.25 years) ``

If you keep the loan past 5.25 years, you come out ahead. If you refi or sell sooner, you lose money on the points.

When buying points makes sense

1. You're keeping the loan 7+ years — well past break-even 2. Rates are at a cyclical high — paying points to lock low-cost long-term capital 3. The seller is paying — purchase concessions often go to points; free for you 4. You're in a low income year and can deduct them — points on a primary are deductible same year if certain conditions met (check with your CPA)

When buying points is a trap

1. You'll refi within 3-4 years — never recover the upfront cost 2. You'd rather have liquidity — $6k in your account vs $95/mo savings, your call 3. You're stretching to afford the down payment — don't drain reserves for a long break-even 4. Rates are likely to drop materially — the discounted rate is less valuable if you refi anyway

Negative points = lender credit

The reverse exists too: take a HIGHER rate, the lender pays YOU a credit at closing. Useful when cash-to-close is tight. Same math in reverse — break-even is how long until the higher rate costs you more than the credit you received.

A good loan officer shows you 3-5 price points (par, +0.5 pt, +1.0 pt, -0.5 pt, -1.0 pt) on the same loan so you can pick what fits.

Want to see your loan at multiple price points? Quote it free — we'll show you the full rate-vs-points grid.