Mortgage Points Calculator
Paying discount points lowers your rate, but it costs money at closing. See how long it takes for the lower payment to pay you back.
Should I pay points for a lower rate?
Discount points are an upfront cost that lowers your rate. Enter the two options from your quote to see how long it takes to come out ahead.
Principal and interest only. These are estimates from the numbers you enter, not a loan offer or a rate quote. Your actual rate, payment and costs depend on your credit, the loan program and the property.
How Discount Points Work
A discount point is a fee you pay at closing in exchange for a lower interest rate. One point usually costs 1% of the loan amount. How much each point lowers the rate varies by lender and by day, so use the exact options from your Loan Estimate.
When points can make sense
- You plan to keep the loan for many years
- You have cash left after your down payment and reserves
- A seller or builder is paying closing costs and can put money toward points
When to skip them
- You might sell or refinance in the next few years
- Cash is tight for your down payment and reserves
Comparing other ways to lower your payment? Try the temporary buydown calculator.
Mortgage Points Questions
Are points the same as origination fees?
No. Discount points buy down your rate. Origination fees pay for making the loan. Both show on your Loan Estimate.
Can the seller pay for my points?
Often, yes, as part of seller-paid closing costs, within the limits of your loan program.
Are points tax-deductible?
Sometimes. A tax professional can tell you how they apply to your situation.
Should I buy points or do a temporary buydown?
Points lower your rate for the life of the loan. A temporary buydown lowers it only for the first year or two. The right choice depends on how long you’ll keep the loan, and Peter can compare both.