Find out if buying down your rate pays off: the cost of discount points, the new payment, the break-even month, and what a temporary 2-1 buydown costs.
Rates here are editable examples, not today's rates. Use the rate from your own quote or Loan Estimate.
Estimates for planning, not financial, tax or legal advice. Figures use US rules unless the page says otherwise.
What are points on a mortgage?
Discount points are fees you pay at closing for a lower interest rate. One point equals 1% of the loan amount: $4,000 on a $400,000 loan. How much each point lowers the rate depends on the lender, the loan and the market, so get the rate for each option from your lender. Lender credits work the other way: a higher rate in exchange for money toward closing costs.
How the break-even is calculated
Cost = points × 1% × loan
Monthly savings = payment at the old rate − payment at the new rate
Break-even = cost ÷ monthly savings (rounded up to a whole month)
Net savings over N years = monthly savings × 12N − cost
Worked example
A $400,000, 30-year loan at 6.75% costs $2,594.39 a month. One point ($4,000) gets 6.5%, which costs $2,528.27, saving $66.12. $4,000 ÷ $66.12 = 60.5, so you break even after 61 months. Keep the loan 7 years and you're $1,554 ahead. Sell or refinance in 4 years and you lose money.
Temporary buydowns (2-1, 1-0, 3-2-1)
A temporary buydown lowers the rate you pay for the first years only, often paid for by a seller or builder. With a 2-1 buydown you pay 2 points below the note rate in year 1, 1 point below in year 2, and the full rate from year 3. The cost is the payment help added up:
Cost = 12 × (full payment − year 1 payment) + 12 × (full payment − year 2 payment)
On $400,000 at 6.75%, year 1 at 4.75% is $2,086.59 and year 2 at 5.75% is $2,334.29, so a 2-1 buydown costs $9,214.85. Fannie Mae limits buydowns to 3 years, with rises of no more than 1 point a year, and lenders must qualify you at the full note rate.
Limitations
- The break-even compares payments only. Points also pay the balance down slightly faster, which isn't counted.
- Points may be tax-deductible. That isn't included.
- Money spent on points could go to a bigger down payment instead. Compare both with your lender.
Sources
How we checked this
Before every update, this calculator is run in a real browser with these known answers, and it must match all of them:
- $400,000, 6.75% to 6.5% for 1 point: break-even 61 months ✓
- Same: saves $66.12 a month, $1,554 ahead after 7 years ✓
- $300,000, 2 points, 7% to 6.25%: break-even 41 months ✓
- 2-1 buydown on $400,000 at 6.75%: $9,214.85 ✓
- 3-2-1 buydown: $18,118.01 ✓
- New rate not lower: error ✓
Last checked October 26, 2026. Spotted something wrong? The math is done in your browser with the formula shown on this page, so you can check any result by hand.
Questions people ask
What are points on a mortgage?
Fees paid at closing to lower your rate. One point costs 1% of the loan. Half a point on $400,000 is $2,000.
How much does it cost to buy down an interest rate?
Each point is 1% of the loan, and how much it cuts the rate varies by lender. On a $400,000 loan, one point is $4,000. If it takes the rate from 6.75% to 6.5%, you save $66.12 a month and break even in 61 months.
How does a 2-1 buydown work?
Your rate is 2 points lower in year 1 and 1 point lower in year 2, then the full rate. The cost equals the payment savings in those two years. On $400,000 at 6.75%, that's $9,214.85.
Is buying points worth it?
Only if you keep the loan past the break-even month. If you might sell or refinance sooner, points usually cost more than they save.
What does a rate buydown calculator show?
The upfront cost, the new payment, the monthly savings and how many months it takes to earn the cost back. This one also prices temporary 2-1, 1-0 and 3-2-1 buydowns.