Online Tool Store
Mortgage Points Calculator
Compare the upfront cost of buying mortgage discount points against the monthly savings from a lower rate, and see the break-even month.
🔒 This tool runs entirely in your browser. Your files are never uploaded to a server.
Without points
Rate:
Monthly payment:
With points
Rate:
Monthly payment:
Upfront cost:
Break-even point
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How it works
- Enter your loan amount, term, and the interest rate you'd get with no points.
- Enter how many points you're considering, the rate reduction each point buys, and the cost per point.
- The calculator compares the two monthly payments and computes exactly how many months it takes for the savings to repay the upfront cost.
The formula
Monthly payment uses the standard amortization formula:
Payment = P × r ÷ (1 − (1 + r)⁻ⁿ), where r = monthly rate, n = number of payments
Break-even (months) = Points cost ÷ (No-points payment − With-points payment). A $400,000, 30-year loan at 6.75% with 2 points (0.25% reduction per point, 1% cost per point) drops the rate to 6.25%, saving about $130/mo for an $8,000 upfront cost — a roughly 61-month (5-year) break-even.
FAQ
What's a discount point?
A discount point is an upfront fee — typically 1% of the loan amount — paid to the lender in exchange for a lower interest rate for the life of the loan. Whether it's worth buying depends entirely on how long you plan to keep the loan versus the break-even period.
What does the break-even point actually mean?
It's the number of months of lower payments it takes for your cumulative savings to equal what you paid upfront for the points. Keep the loan (without refinancing or selling) longer than that, and buying points comes out ahead; sell or refinance sooner, and you'd have been better off without them.
Does this account for the tax deductibility of points?
No — this is a pure cash-flow break-even calculation. Points may be tax-deductible in the year paid or amortized over the loan under some circumstances; consult a tax professional for how that affects your specific break-even math.
How we compare
| Feature | Online Tool Store | Lender's loan estimate | Manual spreadsheet |
|---|---|---|---|
| Instant break-even in months | ✓ | ✗ | ✓ |
| Adjustable rate-reduction-per-point assumption | ✓ | ✗ | ✓ |
| Free, no application required | ✓ | ✗ | ✓ |
A lender's loan estimate shows one specific offer; this lets you test different point counts and reduction assumptions instantly before you even apply, so you walk into the conversation knowing your own break-even math.