Financial glossary
Mortgage Discount Point
In plain English
An upfront charge equal to 1% of the mortgage amount, commonly paid in exchange for a lower interest rate.
Mortgage discount point
A mortgage discount point is an upfront charge equal to 1% of the loan amount. On a $300,000 mortgage, one point costs $3,000. A lender may offer a lower interest rate in exchange, but there is no universal rate reduction per point.
The decision depends on the monthly payment reduction and how long the borrower keeps that mortgage. Dividing the point cost by monthly savings gives a simple break-even period. Selling or refinancing before that date can leave the borrower with a net cost.
Use the mortgage points calculator with actual paired loan estimates, not a guessed rate reduction.
Related calculators
- Mortgage Points CalculatorCompare mortgage payments with and without discount points, calculate the break-even month, and test net savings for the time you expect to keep the loan.
- Mortgage APR CalculatorEstimate mortgage APR from the interest rate, term, discount points, and prepaid finance charges. Compare APR, payment, interest, and TIP.
- Mortgage CalculatorEstimate a complete monthly mortgage payment with principal, interest, property tax, insurance, PMI, and HOA dues. See total interest and loan cost.
- Refinance CalculatorSee if refinancing pays off: new payment, monthly savings, break-even point on closing costs, and lifetime interest compared with your current loan.