Discount Points FAQ
Discount points are one of the most misunderstood line items on a loan estimate. The questions below cover the ones borrowers ask most often. Numbers shown by the calculators on this site reflect standard amortization math; your lender sets the actual buydown schedule.
Frequently Asked Questions
Do discount points lower my monthly payment?
Yes, indirectly. Points lower your interest rate, which lowers the monthly payment on an amortizing loan. The calculator shows both payments so you can see the difference.
Can I negotiate the rate drop per point?
The buydown schedule is set by the lender and the investor buying the loan. You can often shop multiple lenders, since the cost and break point differ.
How are points different from a temporary buydown?
A temporary buydown (like a 2-1 buydown) lowers your rate for only the first one or two years, then reverts. Discount points lower the rate for the entire loan term.
Should I use cash for points or a bigger down payment?
It depends on your rate, the break-even month, and whether you would otherwise pay private mortgage insurance. Run both scenarios with the calculators here.