Are Mortgage Points Worth It?

"Buy the rate down" sounds like a deal — you pay a fee now for a lower rate forever. Whether it actually pays depends on one number: how long you keep the loan. Here's the honest math.

What a point buys

One discount point costs 1% of your loan amount and buys your note rate down by roughly an eighth to a quarter percent — the exact amount shifts with the market and is set by the lender's pricing table. On a $300,000 loan, a point is $3,000 upfront, and it might drop your rate from, say, 6.75% to 6.50%.

The break-even is the whole game

Divide what the points cost by what they save you each month, and you get the number of months to break even. If $3,000 in points saves $48/month, you break even at about 63 months — a little over five years. Keep the loan longer than that and the points win; sell or refinance sooner and you've simply donated the fee. Because the average mortgage is paid off (through a move or refi) well before 30 years, points pay off less often than the sales pitch suggests.

Points, credits, and par

Pricing runs both ways. Pay points and the rate drops below par; take a higher rate and the lender can hand you a credit toward closing costs. Neither is free — you're trading cash now against cost later. The par rate, at zero points and zero credit, is the neutral middle, which is why RallyRates benchmarks it: a headline rate quoted "with points" looks lower than the market really is.

Run your own break-even

Don't take a lender's "it pays for itself" on faith — the break-even depends on your loan size, the exact buydown, and how long you'll stay. Compare a points quote against the par market, and use our free calculator to see the monthly difference each scenario makes.

By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated August 2026.