Mortgage Guide

Mortgage basics

What Are Mortgage Points?

Published by the Mortgage Guide editorial team. Rate assumptions and content updated October 2026. This page is educational. It is not a loan offer, approval, or personalized financial advice.

Points are not automatically the origination fee

Discount points buy a rate reduction. An origination fee can be charged even when the rate is unchanged. Read the loan estimate labels rather than assuming they are the same line.

A common example is 0.25 percentage points of rate per discount point. Your lender's price sheet controls the real trade.

Break-even is a time test

Divide the upfront cost by the monthly savings. If you sell or refinance first, the points may not pay for themselves.

If the payment does not fall, there is no break-even period to show. The points calculator leaves that line blank on purpose.

Points worksheet
InputRole
Cost per pointUsually about 1% of the loan
Reduction per pointComes from the lender
Break-evenShown only when the payment falls

Calculators

Related guides

Sources

Common questions

Should I always buy the lower rate?

Not if you expect to move or refinance before the break-even month. The calculator shows the month. It does not know your plans.

Are points tax deductible?

Sometimes, under IRS rules that depend on purchase versus refinance and on whether you itemize. This site does not calculate that deduction.