Is it better to buy discount points or make a larger down payment?

Both use cash to lower costs, but they do different things. Discount points buy down your interest rate, cutting your monthly payment and lifetime interest, with a break-even that pays off only if you keep the loan long enough. A larger down payment reduces the amount you borrow, lowers the payment, builds instant equity, and – once you cross 20% down – eliminates private mortgage insurance (PMI). If you're near the 20% line, putting cash toward the down payment to drop PMI often beats points, since PMI gives you nothing in return. If you're already past 20% and plan to stay put for years, points can edge ahead. Run both scenarios with your real numbers and time horizon at wealthserene.com/tools/home-affordability.