Mortgage points usually cost 1% of your loan amount per point and are paid upfront at closing in exchange for a lower interest rate.

What mortgage points cost (in dollars)

  • 1 point = 1% of the mortgage amount.
  • On a:
    • 200,000 loan → 1 point ≈ 2,000.
* 300,000 loan → 1 point ≈ 3,000.

* 350,000 loan → 1 point ≈ 3,500.

* 400,000 loan → 1 point ≈ 4,000.

You can often buy fractions of a point (like 0.5 points) or multiple points (2–3 points), and the cost just scales with the loan amount.

What you “get” for that cost

Lenders typically reduce your interest rate by about 0.25 percentage points per point , though this can vary by lender, market, and loan type.

  • Example from recent guides:
    • 1 point might lower the rate from 6.5% to 6.25%.
* 2 points might cut it further (for instance, from 6% to 5.375–5.625% depending on the specific offer).

Because this is lender-specific, the exact discount per point is something you must confirm in a written loan estimate for your exact scenario.

Mini example: quick break-even intuition

Suppose:

  • Loan: 400,000
  • Cost of 1 point: 4,000
  • Rate drop: 6.0% → 5.75%

Guides show that this kind of drop can cut your monthly payment and total lifetime interest, but it only makes sense if you keep the mortgage long enough to recoup the 4,000 via monthly savings (this is the “break-even” concept).

Key things to watch for

  • There are discount points (to buy the rate down) and origination points (a fee the lender charges to do the loan); both are usually expressed as a percentage of the loan.
  • The “1 point = 1%” rule is standard, but the rate reduction per point is not fixed and can differ a lot between lenders.
  • Online calculators and lender quotes are commonly used now (especially with 2024–2026 rate volatility) to compare offers with and without points before you commit.

SEO-style meta description

Paying mortgage points typically costs 1% of your mortgage balance per point and can lower your interest rate by about 0.25%, but the exact savings depend on your lender and how long you keep the loan.

Information gathered from public forums or data available on the internet and portrayed here.