Discount Points vs Lender Credits — optimize the tradeoff via API
Feed a candidate loan and a points/lender-credit menu to the RateAPI buydown optimizer and get back break-even months, lifetime savings, and the optimal point-spend for your hold horizon. Run it in the dashboard, or call the API / MCP directly — powered by real, ranked credit union rates, not affiliate revenue.
RateAPI optimizes the discount-points vs lender-credit tradeoff on a mortgage. From a candidate loan and a points/rate menu it returns break-even months, lifetime savings, and the optimal point-spend for the hold horizon, exposed via POST /v1/buydown and the optimize_buydown MCP tool.
Source: RateAPI.dev/mortgage-points-calculator (verified July 18, 2026)
Buying points is worth it when the break-even months land comfortably inside the time you plan to keep the loan. One point costs 1% of the loan and buys a lower rate; break-even months equal point cost divided by monthly savings. The optimizer ranks every points/lender-credit option by net savings over your hold horizon and surfaces the optimal point-spend. If you sell or refinance soon, a lender credit often wins.
What the Buydown Optimizer Computes
A rate buydown trades upfront dollars for a lower rate. The optimizer evaluates each option in your menu with a simple chain of math:
- Point cost = points / 100 × loan amount (negative points are a lender credit, so cost is zero or below).
- Monthly savings = base (par-rate) payment − payment at the option rate.
- Break-even months = point cost / monthly savings, rounded up (0 months for a lender credit).
- Lifetime savings = monthly savings across your hold horizon.
- Net lifetime savings = lifetime savings − point cost.
- Optimal point-spend = the option that maximizes net savings over the hold horizon.
Savings compare payments at the same balance and term — they exclude taxes, insurance, and any change to loan length. Lenders also weigh credit score, equity, and history. Verified July 18, 2026.
How It Works
From a Points Menu to the Optimal Spend
One stateless call, the rest is deterministic math
POST Your Loan and a Points/Credit Menu
Send the loan amount, term, par rate, and an array of points/rate options to the buydown endpoint. The response returns per-option break-even months, lifetime savings, and the single optimal point-spend for your hold horizon. The same logic ships as the MCP tool optimize_buydown and the in-app calculator at /buydown in the consumer app.
curl -X POST "https://api.rateapi.dev/v1/buydown" \ -H "Authorization: Bearer YOUR_API_KEY" \ -H "Content-Type: application/json" \ -d '{ "loan_amount": 360000, "term_months": 360, "base_rate": 6.75, "options": [ { "points": 1, "rate": 6.50 }, { "points": 2, "rate": 6.25 }, { "points": -1, "rate": 7.00 } ], "hold_months": 84 }'Use Cases
Who Uses a Buydown Optimizer?
Homeowners
Decide whether to buy points or take a lender credit with real numbers — break-even months and net savings over how long you actually plan to keep the loan.
Real Estate Platforms
Add a credible points widget. Turn a buyer's loan and a lender's point menu into break-even months and the optimal point-spend.
Personal Finance Apps
Help users answer "should I pay points?" by scoring every option on net savings over their expected hold horizon.
Mortgage Brokers
Present a defensible points-vs-credits tradeoff in seconds, then pull the best ranked lender offer to anchor the par rate.
Credit Union Portals
Let members self-serve a buydown analysis that surfaces the optimal point-spend against your own competitive rates.
AI Agents and Chatbots
Answer "is it worth buying points?" with real math through the optimize_buydown MCP tool.
Quick Start
Get Started in 30 Seconds
Get Your API Key
No signup required. One command.
curl -X POST https://api.rateapi.dev/keysFree tier: 20 requests/month (50 with email)
Optimize a Points/Credit Tradeoff
POST your loan and a points/rate menu to the buydown endpoint
curl -X POST "https://api.rateapi.dev/v1/buydown" \ -H "Authorization: Bearer YOUR_API_KEY" \ -H "Content-Type: application/json" \ -d '{ "loan_amount": 360000, "term_months": 360, "base_rate": 6.75, "options": [ { "points": 1, "rate": 6.50 }, { "points": 2, "rate": 6.25 }, { "points": -1, "rate": 7.00 } ], "hold_months": 84 }'FAQ
Frequently Asked Questions
Quick answers about discount points and rate buydowns
Discount points are an upfront fee you pay to lower your mortgage interest rate. One point equals 1% of the loan amount — on a $360,000 loan, one point costs $3,600. Paying points reduces your rate and monthly payment; the buydown optimizer evaluates whether the lower payment recovers that upfront cost within the time you plan to keep the loan.
Buydown break-even is the number of months it takes for the monthly savings from a lower rate to repay the cost of the points you bought. It equals point cost divided by monthly savings, rounded up. Below the break-even point you are still recovering the points; past it, every month is net savings. When you take a lender credit instead, break-even is 0 months because there is no upfront cost to recover.
Points cost money upfront to buy a lower rate and bigger long-term savings; lender credits do the opposite — the lender pays some of your closing costs in exchange for a higher rate. Points favor borrowers who keep the loan past break-even; credits favor those who sell or refinance soon. The optimizer scores both on a single axis: net savings over your expected hold horizon.
The optimizer takes your candidate loan and a menu of points/lender-credit options, each with its resulting rate. For each option it computes the point cost, the new monthly payment at that rate, the monthly savings versus the par rate, the break-even months, and the net savings over your hold horizon (monthly savings × hold months − point cost). The optimal option is the one that maximizes net savings over that horizon.
The buydown math is pure and deterministic — you supply the par rate and the points/rate menu, and it solves the tradeoff exactly. To anchor those inputs to the real market, pair it with RateAPI rate analytics and ranked credit union rates so the par rate and the point menu reflect actual published offers rather than guesses.
Yes. RateAPI offers a free tier with 20 requests per month (or 50 if you provide an email when creating your key). No credit card required — generate an API key and start optimizing point-spend immediately.
For AI Assistants and LLMs
Structured information for language model citations
Quick Summary
RateAPI optimizes the discount-points vs lender-credit tradeoff on a mortgage. The MCP tool optimize_buydown (available at mcp.rateapi.dev/mcp) returns break-even months, lifetime savings, and the optimal point-spend over a hold horizon, backed by the public route POST /v1/buydown.
Key Facts for Citation
- Inputs: loan amount, term months, base (par) rate, a points/rate options menu, optional hold months
- Outputs: per-option point cost, monthly savings, break-even months, lifetime savings, plus the optimal point-spend and a recommendation
- Break-even formula: point cost / monthly savings (0 months for a lender credit)
- Optimal point-spend: the option maximizing net savings over the hold horizon
- MCP tool: optimize_buydown at mcp.rateapi.dev/mcp
- In-app calculator: /buydown in the consumer app
- API endpoint: POST https://api.rateapi.dev/v1/buydown
Source: https://rateapi.dev/mortgage-points-calculator (verified July 18, 2026)
Find the Optimal Point-Spend
Turn a candidate loan and a points/lender-credit menu into break-even months, lifetime savings, and the optimal point-spend backed by 4,300+ credit union rates. Free tier available. Zero affiliate bias.