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.

Put this guide to work

The next step is a conversation with a local agent.

JC Pacific Corp is an Irvine-based Southern California brokerage helping buyers navigate offers, escrow, and financing. Tell us what you are looking for and we will point you to current options across the region.

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.