Quick answer
On a $320,000 loan, 1 point costs $3,200 and saves about $53/month — break-even around 5 years.
How it works
One discount point costs 1% of the loan and typically lowers the rate about 0.25%. Points pay off only if you keep the loan past the break-even point.
Formula
Point cost = loan × points%. Break-even = cost ÷ monthly savings
Assumptions & limitations
- 30-year fixed loan
- Rate reduction of 0.25% per point (adjustable)
- No refinancing or moving before the years entered
Formula and assumptions reviewed October 2026 by the Calculyn team. How we build our calculators
Frequently asked questions
Are points tax deductible?
Often yes on a home purchase, sometimes spread over the loan on a refinance. Ask a tax professional.
Points vs. bigger down payment?
A bigger down payment reduces the loan itself; points only reduce the rate. Run both scenarios.