Mortgage Points Calculator
See what discount points cost and when they break even.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
The points cost shown here is the upfront fee to buy mortgage discount points, and the break-even time is how many months of lower payments it takes to recover that fee. It matters because paying points lowers your interest rate, but only pays off if you keep the loan long enough for the monthly savings to outweigh the upfront cost. This mortgage points calculator multiplies your loan amount by the number of points — each point costs one percent of the loan — to find the fee, then divides that fee by your monthly saving to find the break-even month. The break-even method is the standard way to judge points because the decision is fundamentally a trade: cash now for a smaller payment later, and the crossover point tells you when the trade turns profitable. Homebuyers use a mortgage points calculator to decide whether buying down the rate is worthwhile, to compare loan offers with and without points, and to weigh points against a larger down payment. The rule that emerges is simple: if you expect to stay in the home and keep the loan past the break-even month, points save money overall; if you might sell or refinance before then, paying them loses money, so match the decision to how long you realistically plan to keep the loan.
Points cost = loan × points ÷ 100 · Break-even months = points cost ÷ monthly savings
Each discount point costs one percent of the loan, so the points cost is loan × points ÷ 100. That upfront fee buys a lower rate, which trims your monthly payment by a fixed amount. Dividing the points cost by that monthly saving counts how many months of savings it takes to recover the fee — the break-even point. Keep the loan past that many months and points come out ahead; sell or refinance sooner and the upfront cost is not recovered.
Source:Consumer Financial Protection Bureau (CFPB)
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter loan amount, points purchased and monthly payment savings.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Points cost updates instantly as you type — no button to press.
Frequently asked questions
What is a mortgage discount point?
A discount point is a fee you pay the lender at closing to lower your loan's interest rate, a practice called buying down the rate. One point costs one percent of the loan amount and typically reduces the rate by a small fraction of a percent, though the exact reduction varies by lender and market. Points are optional and paid upfront, so they trade cash at closing for a smaller monthly payment over the life of the loan.
Are mortgage points worth it?
It depends on how long you keep the loan. Points pay off only if you stay past the break-even month, when accumulated monthly savings exceed the upfront cost. If you plan to live in the home for many years and are unlikely to refinance, points can save real money over time. If you might move or refinance within a few years, the upfront cost outweighs the savings, so points are usually not worthwhile for short-term ownership.
How is the break-even point calculated?
Divide the total cost of the points by the amount they save you each month. In the example, $3,000 of points saving $50 a month breaks even after 60 months, or five years. Beyond that point the reduced payment is pure benefit; before it, you have not yet recovered the upfront fee. This simple ratio is the core test for whether buying points makes financial sense given how long you expect to hold the loan.
Are mortgage points tax-deductible?
Points paid to buy down the rate on a mortgage for your main home are often deductible, sometimes fully in the year paid and sometimes spread over the life of the loan, depending on the circumstances. Rules are specific and change, and they differ for refinances and second homes. Because the tax treatment can shift the real cost of points, confirm the current rules with the IRS or a tax professional before factoring a deduction into your decision.
Should I buy points or make a bigger down payment?
Both use cash upfront but do different things: points lower your interest rate and monthly payment, while a larger down payment reduces the amount borrowed and can help you avoid mortgage insurance. If your down payment is already at a threshold like 20%, extra cash toward points may lower lifetime cost if you stay long enough. If you are below that threshold, boosting the down payment to cut insurance often wins. Compare both against your timeline.