Mortgage Points Calculator
Whether buying mortgage points pays off, and how many months until it does.
Good to know. Points are a bet that you’ll keep the loan. Sell or refinance before the break-even and you lose it.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Each point costs 1% of the loan. Work out the payment at both rates; the points pay for themselves after their cost divided by the monthly saving, in months.
The formula
cost = loan × points ÷ 100 new rate = rate − points × cut break-even = cost ÷ (payment at rate − payment at new rate)
Worked example
One point on a 320,000 loan costs 3,200 and cuts 7% to 6.75%, lowering the payment from 2,128.97 to 2,075.51, a saving of 53.45 a month. It pays for itself after 60 months, five years.
Sources
- Consumer Financial Protection Bureau, discount points and lender credits Points are paid at closing in exchange for a lower interest rate; one point is 1% of the loan.
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
Sources checked October 3, 2026. 3 automated tests check its answers on every change.
About the mortgage points calculator
Mortgage points, or discount points, let you pay interest up front in exchange for a lower rate. Each point costs 1% of the loan amount; how much it lowers the rate is up to the lender, often around a quarter of a percentage point.
The question is whether you’ll keep the loan long enough to win the money back. The break-even is the cost of the points divided by the monthly saving. Before that month, buying points has cost you money; after it, every payment is a saving.
Many homeowners sell or refinance within five to ten years, often sooner when rates fall. If that is likely, a break-even of five years or more is a gamble. If you plan to stay put with this loan for a long time, points can save a lot over the full term.
Points can sometimes be tax-deductible in the year you buy a home, and sellers can pay for them as part of a deal. The alternative use of the money matters too: the same cash as a larger down payment might avoid mortgage insurance. The mortgage calculator shows the full payment; the refinance calculator weighs a later switch.
Questions people ask
How much does one mortgage point cost?
1% of the loan amount: 3,200 on a 320,000 loan.
How much does a point lower the rate?
It depends on the lender and the market; about 0.25 percentage points per point is common. Ask for the lender’s rate sheet.
Are mortgage points worth it?
When you expect to keep the loan well past the break-even. If you might sell or refinance within a few years, usually not.