Should I Buy Mortgage Points? | Points vs Buydown Calculator
Compare buying points, taking lender credits, or using a 2-1 buydown. See exactly which option costs less based on how long you'll keep your mortgage.
Should I Buy Points, Take Credits, or Use a Buydown?
Compare all your rate options side-by-side. Enter the quotes you've received and see which strategy costs less over your expected timeline.
Loan Details
Rate with no points or credits
How long before you move or refinance?
Buy Points Option
Lender Credit Option
Buydown Option (Optional)
Enter your information and click "Compare Options" to see your results.
What This Calculator Answers
When you get a mortgage quote, you're usually offered multiple rate options: the par rate (no points, no credits), a lower rate if you pay points, or a higher rate with lender credits toward closing costs. Some lenders also offer temporary buydowns. This calculator compares all options based on your specific timeline.
The "best" choice depends entirely on how long you'll keep the loan. Pay points and refinance in 2 years? You lose money. Take credits and stay 15 years? You overpay. This tool shows the crossover points so you can make an informed decision.
When to Buy Points
- ✓You'll keep the loan 7+ years — Points typically break even in 4-6 years. Beyond that, you're saving money every month.
- ✓You have extra cash at closing — Points require upfront payment. Don't drain your emergency fund to buy them.
- ✓You want the lowest possible payment — If monthly cash flow matters more than total cost, points reduce your payment permanently.
When to Take Lender Credits
- →You might move or refinance in under 5 years — The higher rate costs you less than points would have.
- →You're short on closing costs — Credits reduce your cash needed at closing, which can be the difference between buying and not buying.
- →Rates are likely to drop — If you expect to refinance when rates fall, don't pay for a rate you won't keep.
When Buydowns Make Sense
- ★The seller is paying — A seller-paid 2-1 buydown costs you nothing and lowers your payments for 2 years. Always take this if offered.
- ★Your income will rise — If you're starting a new job or expecting raises, a buydown bridges the gap until you can afford the full payment.
- ★You plan to refinance soon — If rates drop and you refinance in year 2, you got lower payments without paying for a permanent rate reduction.
Frequently Asked Questions
Should I buy mortgage points to lower my rate?
It depends on how long you'll keep the loan. Each point costs 1% of your loan amount and typically lowers your rate by 0.25%. Calculate your break-even by dividing the points cost by monthly savings. If you'll stay past that point, buying points makes sense.
What is a 2-1 buydown and is it worth it?
A 2-1 buydown temporarily reduces your rate by 2% in year 1 and 1% in year 2, then returns to the full rate. It's worth it if you expect income to rise, plan to refinance soon, or the seller is paying for it. Otherwise, permanent points often provide better long-term value.
Should I take lender credits or pay points?
Take lender credits if you'll move or refinance within 3-5 years—the higher rate won't cost you much. Pay points if you'll keep the loan 7+ years and want the lowest possible long-term cost. This calculator shows the exact crossover point.
How do seller credits for buydowns work?
Sellers can contribute toward closing costs, including buydown fees. A seller-paid 2-1 buydown gives you lower payments for 2 years at no cost to you. It's often better than a price reduction because it improves your cash flow immediately.
Related Decisions
Refinance Calculator
Planning to refinance later? See when it makes sense.
ARM vs Fixed Calculator
Considering an ARM instead of paying points? Compare the options.
Down Payment Strategy
Should you use cash for down payment or points? Optimize your strategy.
True Monthly Cost Calculator
See your full monthly payment including taxes, insurance, and PMI.