Points are not automatically the origination fee
Discount points buy a rate reduction. An origination fee can be charged even when the rate is unchanged. Read the loan estimate labels rather than assuming they are the same line.
A common example is 0.25 percentage points of rate per discount point. Your lender's price sheet controls the real trade.
Break-even is a time test
Divide the upfront cost by the monthly savings. If you sell or refinance first, the points may not pay for themselves.
If the payment does not fall, there is no break-even period to show. The points calculator leaves that line blank on purpose.
| Input | Role |
|---|---|
| Cost per point | Usually about 1% of the loan |
| Reduction per point | Comes from the lender |
| Break-even | Shown only when the payment falls |
Calculators
Related guides
Sources
Common questions
Should I always buy the lower rate?
Not if you expect to move or refinance before the break-even month. The calculator shows the month. It does not know your plans.
Are points tax deductible?
Sometimes, under IRS rules that depend on purchase versus refinance and on whether you itemize. This site does not calculate that deduction.