Discount points: when buying down the rate pays off
51% of 2025 home buyers paid points. How to calculate your break-even.
Updated October 24, 2026
A discount point is a fee equal to 1% of the loan amount, paid at closing to lower the interest rate. Points appear in section A of the Loan Estimate.
How common are points?
In 2025, 51.3% of home-purchase borrowers paid discount points. When they did, the median amount was $2,610, or 0.87% of the loan (middle half: 0.34%–1.52%). When rates are high, rate buydowns — paid by the borrower, a seller or a builder — become more common.
The break-even calculation
Example: on a $400,000 30-year loan, paying one point ($4,000) to cut the rate from 6.75% to 6.50% lowers the monthly principal and interest by about $66. Break-even ≈ $4,000 ÷ $66 ≈ 61 months. If you expect to sell or refinance sooner, the points cost more than they save.
- Ask each lender for a quote with zero points and with points, at the same lock date.
- Points paid on a purchase loan may be tax-deductible; check IRS Publication 936.
- Lender credits are the reverse trade: a higher rate in exchange for lower closing costs. 33% of 2025 buyers received some lender credit.
See how often buyers paid points in your area on any state or county page.
Data: FFIEC/CFPB HMDA 2025 public loan/application register; FHFA and HUD 2026 loan limits. Home-purchase figures cover owner-occupied single-family (1–4 unit) site-built homes, first-lien closed-end loans. Methodology