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Mortgage Points Calculator

Work out whether paying for discount points to buy down your rate actually pays off — see the upfront cost, your new rate, monthly savings, and the exact month you break even.

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1 point = 1% of your loan amount, paid upfront at closing. Fractional points (e.g. 0.5) are common.

pts

How much each point lowers your rate. This ratio is set by your lender and varies by market — 0.25 is a common planning assumption, but ask your loan officer for their actual rate sheet.

Monthly saving with points$117.06$2,158.38/mo at 6.00% vs $2,275.44/mo at 6.50%
Cost of points$7,200.00
Reduced rate6.00%
Break-even62 mo

Worth it if you keep this loan for the full term: you'd break even in month 62 of your 360-month term, then save $117.06 every month after that.

How this calculator works

A discount point is an upfront fee paid at closing, priced at exactly 1% of your loan amount, in exchange for a permanently lower interest rate on that loan. Points can be fractional (0.5, 1.5, and so on). The cost is straightforward:

Cost of points = Loan amount × (Number of points × 1%)

The rate reduction per point is set by your lender and shifts with market conditions — the CFPB explicitly warns this ratio varies, so this calculator surfaces it as an editable assumption rather than a fixed truth. Once you know the reduced rate, the calculator finds your new monthly principal & interest payment using the standard amortizing-loan formula, then compares it against the no-points payment to find your monthly saving and break-even month:

Break-even month = Cost of points ÷ Monthly saving

Worked example

Take a $360,000 loan at a base rate of 6.5% over 30 years. Buying2 points costs $7,200 upfront (2% of the loan amount) and, at the default 0.25-points-per-point assumption, reduces your rate to 6.00%. That drops your monthly principal & interest payment from $2,275.44 to $2,158.38 — a saving of$117.06 a month. Dividing the $7,200 cost by that monthly saving gives a break-even point of62 months (about 5 years 2 months). Since that's well inside the 360-month loan term, paying for these two points is projected to be worth it as long as you keep the loan for at least 5-and-a-bit years.

What affects your result

  • How long you'll keep the loan — the single biggest factor. Points only pay off if you outlast the break-even month.
  • The lender's actual rate-per-point ratio — a better ratio (more rate reduction per point) shortens your break-even time.
  • Your loan amount — since points cost a percentage of the loan, a larger loan means a larger upfront cost for the same rate reduction.
  • Whether you plan to refinance — if you expect to refinance before break-even, points usually don't make sense.

A note on accuracy

This calculator uses the standard amortizing-loan payment formula and computes on unrounded figures internally, rounding only for display. The rate-reduction-per-point ratio is an editable planning assumption, not a guaranteed lender rate — actual points pricing varies by lender, loan program, and daily market rates. For consumer guidance on points and Loan Estimates, see theConsumer Financial Protection Bureau.

Frequently asked questions

Are mortgage points worth it?

It depends on how long you plan to keep the loan. Buying points has an upfront cost but lowers your rate (and monthly payment) for as long as you hold the loan. If you'll keep the mortgage past the break-even month — the point where cumulative monthly savings equal what you paid for the points — buying points saves you money overall. If you plan to sell or refinance sooner, you likely won't recoup the cost. Use the calculator above with your own numbers to see your specific break-even month.

How much does one point lower your rate?

There is no fixed nationwide answer — each lender sets its own points-to-rate table, and it moves with market conditions. A commonly cited planning assumption is roughly 0.25 percentage points of rate reduction per point, which is the default in this calculator, but you may see anywhere from about 0.125 to 0.375 points per point depending on the lender and the day you lock. Always check the actual rate sheet or Loan Estimate from your lender rather than relying on a rule of thumb for a real transaction.

What's a points break-even calculator, and how is break-even calculated?

It compares the upfront cost of buying points against the monthly savings they produce, to find the month at which the cumulative savings equal the upfront cost — that's your break-even point. The formula is simply break-even month = cost of points ÷ monthly saving. Before that month you're still 'underwater' on the points purchase; after it, every additional month you keep the loan is pure savings.

What is the difference between discount points and origination points?

Discount points (what this calculator models) are optional and paid specifically to buy down your interest rate — the more you pay, the lower your rate. Origination points are a lender fee for processing the loan and don't affect your rate at all; they're really just another way of stating part of the lender's fee as a percentage of the loan amount. Your Loan Estimate should show these as separate line items.

Can I roll the cost of points into my loan instead of paying cash at closing?

Some lenders allow this, but it increases your loan amount (and therefore your total interest cost), which works against the very savings you're trying to capture by buying points. If you're financing the points rather than paying cash, run the numbers carefully — in many cases you're better off either paying points in cash or skipping them and keeping the loan amount lower.

Related calculators

ARM vs Fixed-Rate ComparisonCompare an adjustable-rate mortgage against a fixed rate over time.Closing Cost EstimatorSee how points fit into your total estimated closing costs.Refinance CalculatorWeigh a rate-and-term refinance against your current loan.