Should You Buy Mortgage Points in 2026?

"Should I buy points?" Man, if I had a dollar for every time someone asked me that, I could've paid off my own mortgage by now. It's probably the most common question I get in my office, right up there with "what's your rate today?" and "do you think the Red Sox are gonna make the playoffs?" (The answer to that last one, lately, is "don't get me started." Sox the cat has more consistent performance than our bullpen, and he sleeps 18 hours a day.)

Here's my honest answer about points: it depends. I know, I know, nobody likes that answer. But it's the truth. Buying points — also called discount points — means paying upfront money at closing to permanently lower your interest rate. One point costs 1% of your loan amount and typically reduces your rate by about 0.25%. So on a $400,000 loan, one point costs $4,000 and might drop your rate from 6.5% to 6.25%. Whether that's a good deal depends entirely on how long you'll keep the loan. Get it right, and you save thousands. Get it wrong, and you just made a very expensive donation to your lender.

My brother-in-law bought points on his refinance in 2021 without doing the math. Paid $6,000 for two points, saved $89 a month, then sold the house 18 months later because his company relocated him. He didn't even make it to break-even. I love the guy, but I gave him so much grief at Christmas dinner that my wife had to kick me under the table. Calculate your break-even, people. It's not hard. I'll show you exactly how.

The Break-Even Math (This Is the Only Part That Matters)

Forget everything else. The ONLY question that matters is: how long will it take for your monthly savings to equal what you paid for the points? That's your break-even point. Before break-even, you're losing money. After break-even, you're making money. Simple as that.

Let me walk you through a real example. Sarah Chen came into my office in March looking at a $500,000 house in Newton. Twenty percent down, so $400,000 loan. Her lender offered two options: 6.5% with zero points, or 6.25% with one point. At 6.5%, her principal and interest payment is $2,528. At 6.25%, it drops to $2,462 — a savings of $66 per month. The point cost $4,000.

Break-even calculation: $4,000 ÷ $66 = 60.6 months. Just over 5 years. Sarah's a pediatrician at Boston Children's. She plans to stay in this house at least until her daughter finishes elementary school — 8 to 10 years minimum. She had the $4,000 in savings, not financing it into the loan. For her, buying the point was a no-brainer. After breaking even at year 5, she'll save $66 every month for the remaining ~20 years. That's nearly $16,000 in total savings on a $4,000 investment. Try getting that return from your savings account.

Now flip the scenario. My client Mike (different Mike from the buydown article — I know a lot of Mikes) bought a Southie condo planning to keep it 3 years before upgrading. Same numbers: $4,000 point, $66 monthly savings. After 36 months, he'd saved $2,376. But he paid $4,000. He'd be $1,624 in the hole when he sold. For Mike, zero points was the right call. He actually ended up not buying at all and renting for another year, which... honestly might've been his best financial decision. Southie prices softened in 2025 and he got a better deal later.

When Points Are a Brilliant Move

Buy points when you're confident you'll keep the mortgage well past the break-even period. The longer you hold the loan, the more you save. On a 30-year loan held to maturity, even one point can generate $15,000 to $25,000 in total interest savings. That's real money. That's college tuition. That's a kitchen renovation. That's a really nice boat, which I may or may not have been researching on Craigslist at 11 PM last Tuesday.

Points also make sense when you've got cash sitting in low-yield accounts. If your "savings" is earning 0.5% in a checking account, and your point investment effectively earns 6-8% annually through reduced interest, the point is a dramatically better use of that money. It's not risk-free — nothing is — but mortgage interest savings are about as close to a guaranteed return as you'll find in personal finance.

Another smart use: buying points to lower your payment enough to qualify. If your DTI is borderline — say 37% and the lender wants 36% — buying a point to drop your monthly payment might be the difference between approval and decline. I've seen this save deals. It's expensive, sure, but it gets you the house. Sometimes that's worth it.

And don't forget the tax angle. Points are technically prepaid interest, which means they're potentially deductible in the year you pay them. If you itemize on Schedule A and your mortgage is under $750,000, points are generally fully deductible. I'm not a CPA — talk to yours — but this can soften the blow. A $4,000 point purchase might only cost you $3,000 after the tax benefit if you're in the 25% bracket.

When Points Are a Terrible Idea

Don't buy points if you plan to sell or refinance within a few years. I don't care how good the deal looks — if you're not staying past break-even, you're losing money. And please, PLEASE be honest with yourself about your timeline. "Oh, we'll probably be here at least 5 years" is what everyone says. Then their job transfers them, or they have twins and need more space, or they get divorced, or they decide they hate the neighbors. Life happens. If your break-even is 5 years and you're not 90% confident you'll stay 7+, think hard.

Also avoid financing points into your loan principal. Rolling that $4,000 into your $400,000 loan means you're paying interest on the points themselves. It stretches your break-even further and costs you more over time. If you don't have the cash for points, you probably shouldn't be buying them. Save up and refinance later if rates drop.

Watch out for crappy point pricing too. In competitive markets, some lenders offer juicy rate reductions — maybe 0.375% per point. In slow markets, you might only get 0.125% per point, which makes break-even painfully long. Shop around. Get quotes with AND without points from at least three lenders. Calculate break-even yourself — don't trust the lender's marketing materials. And use our calculator. Seriously. That's what it's there for.

I had a client last fall who got quotes from four different lenders for the same loan amount. Lender A offered 0.25% reduction per point. Lender B offered 0.375%. Lender C offered 0.125% and wanted a $500 processing fee. Lender D offered 0.30% but only if he bought at least two points. Same borrower, same credit score, same day. The quotes varied by thousands of dollars in potential value. Shopping around isn't being cheap — it's being smart. Your lender works for you, not the other way around.

My Personal Take for 2026

With rates sitting around 6.25-6.5% in mid-2026, points are getting more attention than they have in years. Buyers are desperate for any way to lower their payment, and points offer a direct, transparent path. But here's my advice: be strategic, not emotional.

If you're buying your forever home, you've got cash, and your break-even is under 6 years? Buy the points. The math works. If you're buying a starter home, you're not sure about your job situation, or your break-even is 7+ years? Skip the points, take the higher rate, and refinance if rates drop. Flexibility has value too.

And whatever you do, calculate your break-even BEFORE you fall in love with a house. Know your number. Write it down. Tape it to your bathroom mirror if you have to. The worst time to decide about points is at the closing table when everyone's staring at you waiting for a signature. Make the decision with a clear head, honest numbers, and realistic expectations about how long you'll actually keep that mortgage.

Use our Mortgage Payment Calculator to run your specific numbers. Try different point scenarios. See what break-even looks like at your loan amount, your rate, your expected timeline. The calculator doesn't care about your feelings — it just gives you the truth. Sometimes the truth is "buy the points." Sometimes it's "walk away." Either way, you want to know before you sign.

— Daniel O., who didn't buy points on his last refi because he plans to move when Emma goes to college... in 12 years... and might have miscalculated