Mortgage Basics

What Are Mortgage Points?

Buying down your rate — how discount points work.

4 min readUpdated 2026Mortgage Basics

How points work

One point equals 1% of the loan amount, paid at closing in exchange for a lower rate. The break-even is the number of months of savings needed to recover the point cost.

When they make sense

Points typically pay off for buyers keeping the loan longer than the break-even — often 4–6 years.

Key takeaways

  • Points are prepaid interest.
  • Compute break-even before buying them.

Frequently asked questions

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