Mortgage Points vs Larger Down Payment
**Discount points** buy a lower rate upfront. A **larger down payment** cuts loan size and may remove **PMI**—different break-even math and cash flexibility.
Step by step
1. Points break-even
Years to recover points cost via payment savings vs keeping cash invested.
2. Down payment impact
Every 1% down changes PMI and payment—model both.
3. Keep reserves
Do not drain emergency fund for points or down payment.
Points vs down payment
Points optimize rate; down payment optimizes loan size and PMI.
- Points: Lower rate; upfront cash; break-even in years.
- Larger down: Less interest over life; PMI drop at 20%.
Use our calculators
Common mistakes
- Buying points on a short hold
- Zero reserves after max down payment
FAQ
Are points tax-deductible?
Rules vary—confirm with a tax professional for your situation.