The Short Answer
Buying points makes sense when the monthly savings last past your break-even point: the number of months it takes your lower payment to repay the upfront cost. On a $350,000 loan, one point ($3,500) that saves $59 per month breaks even in about 59 months, roughly five years. If you plan to keep the home longer than your break-even, points usually win; if not, keep the cash. Ask Patrick how buydown calculators would work for your loan.
One point costs 1% of your loan and typically lowers your rate by about a quarter of a percent. Enter your loan amount, rate, and points below to see the dollar cost and the effect on your monthly payment.
Points vs Rate Estimator
EstimatorEnter your own numbers. This is an educational estimator for a 30-year fixed-rate loan, not a quote, a lock, or a guarantee.
Assumes 1 point lowers the rate by about 0.25 percentage points, the common rule of thumb. Your lender's actual rate grid can price points differently.
Cost of points
$3,500
Payment without points
$2,212
Payment with points
$2,154
Monthly savings
$58
Break-even
About 60 months (5.0 years) to repay the cost
If you plan to keep this home longer than your break-even, the points can save you money over time. If your plan is shorter, the cash may be better spent elsewhere.
Estimator disclaimer: results are estimates for a 30-year fixed-rate loan at the rates you enter. They exclude taxes, insurance, HOA fees, and lender-specific pricing. Final costs come from your actual Loan Estimate. Patrick Kevin Fagan is a licensed Texas loan officer (NMLS) and real estate sales agent, not a financial planner.
The break-even math, in plain English
Break-even is simple arithmetic: divide the dollar cost of the points by the monthly savings.
Formula
Point cost ÷ Monthly payment savings = Months to break even
Then divide months by 12 to get years. If your planned ownership is longer than the break-even, the buydown saves money over time.
Worked example from the estimator at $350,000, 6.5%, 1 point: the point costs $3,500, the payment drops from about $2,212 to about $2,154, and the $58 monthly savings repays the cost in about 60 months, roughly 5 years. Every 0.25 point bought is roughly a quarter of the way to the next 0.25% rate drop, and the dollars scale up as the loan grows.
When buying points pays off
- You plan to stay past the break-even. This is the whole game. A 5-year break-even with a 10-year stay is a clear win on paper.
- Lower cash needed later matters. A lower payment can be the difference between comfortable and tight if income changes or expenses rise.
- Rates are likely to stay steady or rise. Points buy certainty. If you think you will refinance in two years, the certainty is worth less.
And when to skip them: a short planned stay, thin cash reserves after closing, or a seller or builder concession that pays your closing costs anyway. Sometimes the lender credit (a higher rate in exchange for money toward closing) beats buying points outright.
Sources and dates
Point pricing and the 0.25% per-point rule of thumb vary by lender and market, so confirm your real rate grid with a loan officer before deciding. Educational references: CFPB on loan estimates and discount points, accessed September 20, 2026. FHFA conforming loan limit announcement for 2026, November 25, 2025. This estimator is an educational tool, not a quote or a commitment to lend.
Ask Patrick about buydown calculators
Get a straight answer on buydown calculators and whether paying points makes sense for your loan.
