Reviewed by Jeff Shin, NMLS #1041652. Updated .
Also called: mortgage points, buying down the rate.
How points work
The CFPB explains that one point equals 1% of the loan amount. Paying points lowers the rate compared with a zero-point loan. How much the rate drops per point is set by the lender’s pricing that day, so ask for the same loan priced with and without points.
The break-even
Divide what the points cost by what they save each month. The answer is how many months it takes to get your money back. If you are likely to sell or refinance before then, the points lose money. See points break-even checks before you lock.
Where points show up
On page 2 of the Loan Estimate, points are listed under Origination Charges as a percentage of the loan amount. Points are also part of the APR. The reverse trade, a higher rate in exchange for money toward closing costs, is a lender credit.
Example
On a $300,000 loan, one point costs $3,000. If it lowers the payment by $40 a month, $3,000 ÷ $40 = 75 months, a little over six years, to break even.
Illustrative example only, not a quote. Actual APR and terms vary.
Related terms
Related on BankPricer
Sources
Definitions on this page are summarized from the agencies that set the rules. Lenders can add stricter requirements. Checked October 7, 2026.
Not sure which of these applies to you?
That is usually the actual question. Send the situation rather than the product name — purchase or refinance, primary or investment, price range, and timeline — and you get the structures that fit, with what each one costs.