One point on a $380,000 mortgage costs $3,800 and buys you back $62.71 a month. Whether that's a bargain or a waste comes down to a single division — and most buyers never do it.
Discount points are having a moment. With the 30-year fixed averaging 6.71% in Freddie Mac's survey of September 3, 2026 (up from 6.66% the week before, and 6.50% a year earlier), lenders are leaning hard on buydowns in their rate sheets, because a quarter-point looks a lot more impressive at 6.71% than it did at 3.75%. That part is true. The part that gets skipped is that a buydown is a trade, not a discount, and the exchange rate depends entirely on how long you keep the loan.
Here's the whole decision in four numbers.
Number one: what the point actually costs
A discount point is 1% of the loan amount, paid at closing. Not 1% of the purchase price — 1% of what you borrow. On a $380,000 loan that's $3,800.
Lenders will sell fractions, and they will also sell three or four points if you let them. The rate reduction per point is not fixed either: depending on the day and the investor, one point buys somewhere between 0.125% and 0.25%. Ask for the reduction in writing per point, not as a bundled "your rate is X" quote. If the answer is 0.125% per point, the rest of this math goes badly for you and you should stop there.
For this walkthrough, assume the good end of the range: one point takes 6.71% down to 6.46%.
Number two: what it saves per month
At 6.71% on $380,000 over 30 years, the payment is $2,454.58 in principal and interest.
At 6.46%, it's $2,391.87.
The gap is $62.71 a month. That's the entire benefit. Not the $22,574 in lifetime interest the lender's flyer will show you — that number assumes you keep this loan for all 360 months, which almost nobody does.
You can run both versions yourself on the loan calculator — enter the loan amount, 360 installments, and the monthly rate (the annual rate divided by 12: 0.5592% and 0.5383%). Seeing the two payments side by side takes about a minute.
Number three: the break-even
$3,800 ÷ $62.71 = 60.6 months.
Five years and half a month. That's the date the point starts making you money. Before it, you've paid for a discount you didn't finish using.
This is the number to hold in your head, because it reframes the question completely. You are no longer asking "is 6.46% better than 6.71%" — obviously it is. You're asking: will I still have this exact loan in September 2031?
Number four: how long you'll actually hold the loan
This is the one nobody can hand you, and the one that decides everything.
Two things end a mortgage early: selling and refinancing. Both are live risks right now. Plenty of forecasters have the 30-year drifting toward the high 5s by late 2026 or into 2027 — and if that happens, anyone who paid points in September will refinance out of a rate they paid cash to obtain, having captured maybe a year of the sixty months they bought.
That's the asymmetry worth naming. When rates are falling, points are a bet against your own future refinance. When rates are flat or rising, points age well, because the loan you paid to improve is the loan you're stuck with anyway.
So the honest test is three questions:
- Is this a house you expect to be in past 2031? Starter homes and job-mobility years both argue no.
- Do you believe rates will still be near 6.7% in two years? If you think they'll be lower, you're buying down a rate you plan to abandon.
- Would the $3,800 be doing something better at closing? A larger down payment that drops you below 80% LTV kills mortgage insurance — often a bigger monthly win than the buydown, for the same cash.
That last one gets overlooked constantly. In my experience, borrowers who come in with the break-even already calculated end up spending the money on the down payment far more often than on points.
Two things that shift the math
Seller-paid points. If the seller is covering closing costs as a concession, the break-even math is irrelevant — the point costs you nothing and the lower rate is free. Take it. The calculation above only applies to points you pay for.
The tax deduction. Points on a primary residence are generally deductible as prepaid mortgage interest, and typically in full in the year paid when you're buying rather than refinancing. If you itemize, that shortens the real break-even by a meaningful stretch. If you take the standard deduction — as most households do — it changes nothing, so don't let it be sold to you as if it does.
The rule that survives every scenario
Get the per-point rate reduction in writing, compute the two payments, divide the cost by the difference, and compare that number of months to your honest guess about how long you'll hold the loan. If the break-even is under four years, points are usually worth it. Between four and seven, it depends on your confidence about staying put. Past seven years, walk away — you're paying for a rate you'll never fully use.
And if you want to sanity-check what a lender is quoting you, back into it: the interest rate calculator tells you the rate implied by a payment and a term, which is a fast way to catch a "buydown" that quietly added fees somewhere else.
Rates cited are from Freddie Mac's Primary Mortgage Market Survey of September 3, 2026; payment figures are principal and interest only and exclude taxes, insurance and escrow. This is general information, not mortgage or tax advice — run your own numbers with your lender.