Mortgage Points Calculator
Each discount point costs 1% of your loan and typically lowers your rate by 0.25%. Find your exact break-even date and whether buying points makes sense for your timeline.
1 Loan Details
2 Points to Purchase
Break-Even Point
—
Enter loan details to calculate
Monthly Savings
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with points vs without
Points Cost
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upfront at closing
Total Interest Saved
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over full loan term
Net Lifetime Savings
—
after recouping cost
Net Savings by How Long You Stay
Positive = buying points was worth it at this horizon
| Years in Home | Gross Savings | Net Savings | Verdict |
|---|---|---|---|
| Enter loan details above | |||
Points Comparison (0 – 3 points)
| Points | Rate | Cost | Payment | Break-Even |
|---|---|---|---|---|
| Enter loan details above | ||||
What Are Mortgage Points?
Discount points are prepaid interest you pay at closing to permanently lower your mortgage rate. One point equals 1% of the loan amount.
On a $400,000 loan, 1 point costs $4,000 upfront and typically reduces your rate by 0.25%, saving about $55/month on a 30-year mortgage.
The key question is: will you stay long enough to recoup that upfront cost? This calculator gives you the exact answer.
When to Buy Points
- ✓ You plan to stay in the home past the break-even date
- ✓ You have the cash available at closing
- ✓ Rates are high and you won't be refinancing soon
- ✗ You might sell or refinance within a few years
- ✗ The cash could earn more invested elsewhere
Points are also tax-deductible in the year paid for a primary residence purchase — consult a tax advisor for your situation.
After deciding, use the Mortgage Calculator with your bought-down rate to see your full PITI payment.
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Frequently Asked Questions
What are mortgage points?
Discount points are prepaid interest paid at closing to lower your rate. One point costs 1% of the loan amount and typically lowers the rate by about 0.125–0.25 percentage points, depending on the lender and market.
How do I calculate the break-even point?
Divide the cost of the points by the monthly savings. On a $350,000 loan, one point ($3,500) that cuts the rate from 6.5% to 6.25% saves about $57 a month, so it breaks even after about 61 months (5 years).
Are mortgage points tax deductible?
Points paid on a loan to buy your main home are generally deductible in the year paid if you itemize. Points on a refinance are usually deducted over the life of the loan. Check IRS Publication 936.
Should I buy points?
Buy points only if you expect to keep the loan well past the break-even date. If you may sell or refinance within a few years, keeping the cash is usually better.