FINANCIAL · MORTGAGE POINTS

Mortgage Points Calculator

Calculate whether buying discount points makes financial sense — compare the upfront cost of points against monthly savings to find your break-even timeline.

Loan Details
Discount Points

1 point = 1% of loan amount upfront.

Typical lender offer: 0.25% per point. Confirm with your lender.

02 Break-Even
Break-even point
59 months
(4 yr 11 mo)
Upfront cost of points$8,000.00
Monthly savings$135.65
03 Payment Comparison
Monthly payment (no points, 7.5%)$2,796.86
Monthly payment (2 pts, 7.000%)$2,661.21
04 Full-Term Savings
Interest saved over 30 years$48,833.30
Net savings after point cost+$40,833.30

Assumes you keep the loan for the full term and don’t refinance. If you sell or refinance before the break-even date, buying points costs more than it saves. 1 point = 1% of the loan amount. Actual rate reduction per point varies by lender.

About This Calculator

Determine whether buying discount points on your mortgage is worth it. Enter your loan amount, base interest rate, number of points you're considering, and the rate reduction your lender is offering — the calculator shows your monthly savings, the upfront cost, and exactly how many months until the points pay for themselves.

How It Works

Enter your loan amount and the interest rate your lender quoted without any points (the base rate). Add how many points you're considering (1 point = 1% of the loan amount) and the rate reduction per point your lender is offering (typically 0.25%). The calculator computes the lower payment at the discounted rate, the monthly savings, the upfront cost of the points, and the break-even month — the point at which cumulative savings exceed what you paid upfront.

The Formula

Points cost = (points / 100) × loan Break-even = ⌈points cost / monthly savings⌉

Points
Number of discount points purchased (1 point = 1% of loan amount)
Monthly savings
Difference in monthly P&I payment between the base rate and the discounted rate
Break-even
Number of months until cumulative savings equal the upfront points cost
r
Monthly interest rate = annual rate ÷ 1200
n
Total monthly payments = term × 12

Frequently Asked Questions

What are mortgage points?
Discount points are upfront fees paid to a lender at closing in exchange for a lower interest rate on your mortgage. One point equals 1% of your loan amount — on a $400,000 loan, one point costs $4,000. Each point typically reduces the rate by about 0.25%, though the exact reduction varies by lender and market conditions.
When does buying points make sense?
Buying points makes sense when you plan to stay in the home long enough to reach the break-even point. If your break-even is 59 months (about 5 years) and you expect to live in the home for 10 or more years, buying points can save thousands over the life of the loan. If you might sell or refinance sooner, the upfront cost may not be recovered.
What is the difference between discount points and origination points?
Discount points are prepaid interest that buys down your rate. Origination points are fees the lender charges to process the loan — they don't reduce your rate. Always clarify with your lender which type of points are being quoted before using this calculator.
How is this different from the Refinance Calculator?
The Refinance Calculator compares an existing loan (your current mortgage) against a new loan at a lower rate, accounting for closing costs. The Mortgage Points Calculator evaluates whether to buy a lower rate at origination — you're comparing the same new loan at two different rates, not a current loan vs. a new one.