Mortgage Points Calculator
Decide whether paying discount points to lower your rate is worth the upfront cost — and how long until it pays off.
How the mortgage points calculator works
Discount points let you pay the lender extra at closing in exchange for a lower interest rate, effectively prepaying interest to cut your monthly payment. This calculator prices that trade. One point costs one percent of the loan amount and typically lowers the rate by roughly a quarter of a percentage point, though the exact reduction varies by lender.
It computes the upfront cost, the smaller monthly payment, and the break-even point where cumulative savings repay what you spent. Past that month you come out ahead, so the math turns entirely on how long you keep the loan.
Worked example: with loan amount of $300,000, loan term (years) of 30 and rate without points of 6.75%, the mortgage points calculator shows break-even on points of 61 months.
- Cost of points
- $6,000
- New rate
- 6.25%
- Monthly saving
- $98.64
- Lifetime net saving
- $29,511
The formula
Point cost equals the loan amount times the number of points times one percent. The reduced rate produces a lower amortized payment; break-even months equal point cost divided by the monthly payment savings. Lifetime net saving subtracts the upfront cost from total interest avoided over the holding period.
- Each point is assumed to lower the rate by a fixed amount; actual reductions differ between lenders and loan types.
- Points are paid in cash at closing rather than financed, which would erode part of the benefit.
- The break-even assumes you hold the loan to that month without selling or refinancing early.
- Tax deductibility of points is not modeled and depends on your individual circumstances.
- The cash spent on points is treated as having no alternative investment return.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender or a licensed advisor.
Questions about the mortgage points calculator
When does buying points actually make financial sense?
Points pay off when you keep the loan well past the break-even month, which favors borrowers settling into a long-term home. If you might sell or refinance within a few years, you likely will not recover the upfront cost. Long holding periods and high loan balances tilt the decision toward buying points.
What is the difference between discount points and origination points?
Discount points buy down your interest rate and are optional. Origination points are a fee the lender charges to process the loan and do not lower your rate. This calculator models discount points only.
When comparing offers, separate the two, because a quote heavy in origination points provides no rate benefit for the cost.
Can I negotiate or deduct the cost of points?
Points are often negotiable, and sellers can sometimes pay them as a concession, which changes your break-even entirely. On a primary residence, discount points may be tax-deductible as prepaid interest, though rules vary and some must be amortized over the loan term. Confirm deductibility with a tax professional before counting it as savings.
Is the Mortgage Points Calculator free to use?
Yes. Every calculator on MortgageLoansCalculator is completely free, with no sign-up, login or paywall. Run as many scenarios as you like.
What is a mortgage point?
A mortgage (discount) point is an upfront fee equal to 1% of your loan amount that buys down your interest rate — usually by about 0.25% per point.
Whether it pays off depends on how long you keep the loan; the break-even is shown above.
Mortgage Refinance Calculator
Compare your current loan to a refinance: new payment, closing costs and the break-even point.
Should I Refinance Calculator
Decide if refinancing is worth it by weighing monthly savings against closing costs and time in the home.
Mortgage Payoff Calculator
See how extra monthly payments shorten your mortgage and slash the interest you pay.
Blended Rate Mortgage Calculator
Find the combined effective rate across a first mortgage and a second loan or HELOC.
Mortgage Debt Consolidation Calculator
See whether rolling high-interest debt into your mortgage lowers your total monthly cost.
Cash-Out Refinance Calculator
Refinance for more than you owe and take the difference in cash — new payment, cash in hand and new LTV.