Are Mortgage Points Worth It? (Discount Points Explained)
By Colson · Reviewed by Abodemic Editorial Standards · Updated June 1, 2026
A mortgage point costs 1% of the loan and typically cuts your rate by about 0.25%. Points are worth it only if you keep the loan past the breakeven — the month when the monthly savings repay the upfront cost. Plan to move or refinance sooner and points usually lose.
What are mortgage points?
Discount points are an optional upfront fee you pay to lower your interest rate. One point costs 1% of the loan amount and typically reduces the rate by about 0.25% (this varies by lender). Compare a loan with and without points in the mortgage calculator.
How to know if points are worth it
Find the breakeven: divide the cost of the points by the monthly payment savings. If a point costs $4,000 and saves $60/month, breakeven is about 67 months (5.5 years). Keep the loan past that point and the points pay off; sell or refinance sooner and they don't.
Points vs a bigger down payment
If you have extra cash, compare buying points to putting more down (which shrinks the loan and can remove PMI). Run both scenarios — sometimes the larger down payment wins, especially if it gets you to 20% equity.