What Are Mortgage Points?
By JC Pacific Corp Published 2026-09-01 Last professionally reviewed: September 2026
Mortgage points are upfront charges associated with loan pricing. Discount points may be paid to obtain a lower interest rate, while other charges may use similar terminology.
How Much Is One Point?
One point generally equals 1% of the loan amount. The rate reduction received for paying a point is not universal.
What Is the Break-Even Period?
The break-even period estimates how long monthly savings must continue to recover the upfront cost. For example:
- Determine the cost of the points
- Determine the monthly payment savings
- Divide the cost by the monthly savings
- Compare the result with the expected ownership or loan period.
This simple calculation does not include every tax or opportunity-cost consideration.
Frequently Asked Questions
Are points the same as a down payment?
No.
Can the seller pay points?
Possibly, subject to negotiation and loan-program limits.
Are points always tax deductible?
Tax treatment depends on current law and individual circumstances. Consult a qualified tax professional.
Points may make sense for a long ownership period but provide less benefit if the loan will be repaid or refinanced soon.
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A note on legal advice: These guides provide general, educational information about California real estate practice. They are not legal advice and do not create an attorney-client relationship. Mortgage information is general education, not individualized lending, tax or legal guidance. For advice about your specific offer, contract, closing or financing, consult a qualified California real estate attorney and a qualified mortgage professional.