---
title: "Discount points — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/discount-points/
---

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Mortgage & lending[All terms starting with D](/glossary/#letter-D)

# Discount points

Also called: points, buying down the rate, mortgage points

An optional upfront fee paid to the lender in exchange for a permanently lower interest rate.

One point is one percent of the loan amount, paid at closing, in exchange for a lower note rate for the life of the loan. Points are optional, and how much rate each point buys varies by lender and by day.

The only honest way to evaluate points is a break-even: divide what the points cost by the monthly payment they save, and compare that number of months against how long you realistically expect to keep the loan.

## Why it matters

Points reward a long hold. If you refinance or sell before the break-even, you paid for a discount you never collected.

## Put a number on it

This term feeds the calculators below.

- [Mortgage Payment CalculatorEstimate monthly mortgage payments with taxes, insurance, and PMI.](/calculators/mortgage-payment/)
- [Refinance Savings CalculatorModel payment changes and break-even timing for a refinance.](/calculators/refinance/)

## Related terms

- [APR (Annual Percentage Rate)The yearly cost of a loan expressed as a percentage, including the interest rate plus most lender fees.](/glossary/apr/)
- [Interest rate (note rate)The percentage charged on your loan balance, the number your principal and interest payment is calculated from.](/glossary/interest-rate/)
- [Rate lockA lender’s commitment to hold a quoted interest rate for a set number of days while your loan is processed.](/glossary/rate-lock/)
- [Temporary buydownA prepaid subsidy that reduces the payment for the first year or two, after which the payment rises to the note rate.](/glossary/temporary-buydown/)

## Go deeper

- [Discount points break-even, without the sales pitch](/blog/discount-points-breakeven-without-sales-pitch/)

## More in Mortgage & lending

- [Amortization](/glossary/amortization/)
- [APR (Annual Percentage Rate)](/glossary/apr/)
- [ARM (Adjustable-Rate Mortgage)](/glossary/arm/)
- [Cash-out refinance](/glossary/cash-out-refinance/)
- [Closing costs](/glossary/closing-costs/)
- [Conforming loan](/glossary/conforming-loan/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

[Talk to Ondo](/contact/)[Browse all terms](/glossary/)

Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. [Licensing and disclosures](/licensing/)