Should You Buy Mortgage Points in 2026? The Break-Even Math

Mortgage discount points are upfront fees paid to permanently lower your interest rate. One point costs 1% of the loan amount and typically reduces your rate by 0.25%. On a $400,000 loan, one point = $4,000 upfront for a 0.25% rate reduction. Whether that's worth it depends entirely on how long you keep the loan.

The Break-Even Calculation

One point on a $400,000 loan at 6.75% reduces the rate to 6.50%, saving $65/month. Break-even: $4,000 / $65 = 61 months (just over 5 years). If you keep the loan longer than 5 years, the points paid off. If you sell or refinance before then, you lost money.

When Points Make Sense

• You plan to stay in the home 7+ years
• Rates are high and you expect to keep the loan long-term rather than refinance
• You have extra cash at closing and want to reduce your monthly payment permanently
• You're buying at the top of your budget and need the lower payment to qualify

When to Skip Points

• You plan to sell within 5 years
• Rates are elevated and you expect to refinance when they drop
• You need the cash for reserves, repairs, or down payment instead
• You're in an adjustable-rate mortgage — points on an ARM rarely make sense