Discount points
Also called: Mortgage points, Buying down the rate
Upfront fees paid at closing to lower a mortgage's interest rate. One point costs 1% of the loan amount and typically cuts the rate a fraction of a percent.
On a $300,000 loan, one point costs $3,000. How much it lowers the rate varies by lender and market, so compare quotes with and without points on the same day.
Points pay off only if you keep the loan long enough. Divide the cost of the points by the monthly savings to find your break-even; if you might sell or refinance before then, skip them. Points on a home purchase are often deductible as mortgage interest if you itemize.
Calculators that use this
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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.