01
Price and rate move together
Mortgage pricing offers combinations of rate, points, and credits. A headline rate without its cost does not describe the offer.
02
Calculate a practical break-even
Divide the additional upfront cost by the estimated monthly payment savings, while recognizing that taxes, insurance, and future refinancing are separate uncertainties.
03
Protect liquidity
Cash used for points is unavailable for reserves, repairs, moving, or other goals. The lower payment should be weighed against the value of keeping that cash.
04
Revisit the timeline
Selling, refinancing, or paying the loan off before the break-even point may reduce the benefit of paying points. A long expected holding period can support a different conclusion.
Frequently asked questions
Questions that add to the answer
Are points tax deductible?
Tax treatment depends on the facts and current law. Ask a qualified tax professional rather than assuming.
Is one point always one percent of the loan amount?
A point generally describes one percent of the loan amount, but the rate reduction received for that cost is not fixed.
Can the seller pay points?
A seller credit may cover permitted costs, subject to the loan program, contract, value, and actual transaction.
Authoritative sources
Sources reviewed September 9, 2026
Program rules and public guidance can change. The current source and the review of the actual borrower, property, and transaction control.
Related resources