Mortgage Points Calculator
Calculate whether buying mortgage discount points is worth it. Find your break-even period and total savings.
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Decision Support System
Showing national median — click Calculate above to personalize
Mortgage Points Benchmarks
LIVE DATAfincalcs.coSource: Freddie Mac, MBA, IRS Publication 936, 2026
Points Cost vs. Savings by Loan Amount
fincalcs.coBuying 1 point (6.65% → 6.4%) on different loan amounts. Is it worth the upfront cost?
| Loan Amount | Point Cost | Monthly Savings | Break-Even | Lifetime Savings | Net Gain (30yr) |
|---|---|---|---|---|---|
| $200,000 | $2,000 | $31/mo | 65 months | $11,160 | +$9,160 |
| $300,000 | $3,000 | $46/mo | 65 months | $16,560 | +$13,560 |
| $400,000 | $4,000 | $62/mo | 65 months | $22,320 | +$18,320 |
| $500,000 | $5,000 | $77/mo | 65 months | $27,720 | +$22,720 |
| $650,000 | $6,500 | $100/mo | 65 months | $36,000 | +$29,500 |
Based on 1 point reducing rate by 0.25%. Break-even assumes you stay in the home. If you sell or refinance before break-even, points cost you money.
How Do Your Savings Compare?
UPDATES LIVEShowing median monthly savings from buying points. Click Calculate to see yours.
What This Means For You
UPDATES LIVEBuying points costs $4,000 upfront but saves $62/mo. You break even in 65 months. After that, every month is pure savings.
Your Complete Mortgage Picture
CONNECTEDHow mortgage points fit into your overall mortgage strategy.
What Should You Do Next?
UPDATES LIVEBased on your points analysis, here’s the key question.
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Should You Buy Points? Decision Matrix
fincalcs.coPoints are worth it in specific situations. Here’s how to decide.
| Decision Factor | Status | Your Number | What It Means |
|---|---|---|---|
| Break-even period | Reasonable | 65 months (5.4 yrs) | Under 7 years is generally favorable. Over 10 years means points are risky. How long will you stay? |
| Planned ownership | Verify | Must exceed break-even | If you might move or refinance within 5 years, skip points. |
| Cash availability | Evaluate | $4,000 upfront | Points drain cash that could go to a larger down payment or reserves. Compare strategies |
| Tax benefit | Deductible | ~$880 tax savings | Points are deductible if you itemize. This reduces the effective cost and shortens break-even. |
| Rate environment | Consider | 6.65% current | If rates are expected to drop, you could refinance anyway — making points unnecessary. Track rates |
Rule of thumb: buy points only if you plan to stay past break-even AND have adequate cash reserves after closing.
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This calculator is for informational and educational purposes only. Results are estimates based on the information you provide and standard financial formulas. This is not financial advice. Consult a qualified financial advisor for decisions specific to your situation. Full Disclaimer
Learn More About Mortgage Points
Things to Know
Essential concepts for understanding your results
How Points WorkWhat are mortgage discount points?
One point = 1% of the loan amount paid upfront to reduce your interest rate, typically by 0.25%. On a $300,000 loan: 1 point = $3,000, reducing rate from 6.5% to 6.25%. This lowers monthly P&I from $1,896 to $1,847 — saving $49/month. Points are essentially prepaid interest — you pay more upfront in exchange for a lower ongoing cost. Points are tax-deductible as mortgage interest in the year paid (purchase) or amortized over the loan (refinance).
Break-EvenWhen do mortgage points pay for themselves?
Break-even = Point Cost ÷ Monthly Savings. One point at $3,000 saving $49/month: $3,000 ÷ $49 = 61 months (about 5 years). If you stay in the home longer than 5 years, the point saves money. If you sell or refinance sooner, you lose. Two points have a longer break-even. Consider your expected tenure and the likelihood of refinancing before buying points.
Negative PointsWhat are lender credits (negative points)?
Lender credits work in reverse: the lender pays your closing costs in exchange for a higher interest rate (typically +0.25% per credit). On $300,000: a lender credit might cover $3,000 in closing costs but increase your monthly payment by $49. This makes sense if you plan to sell or refinance within 3-5 years — you avoid paying closing costs on a loan you will not keep long enough for the higher rate to cost more than the credit saved.
When to Buy PointsShould you buy mortgage points?
Buy points when: you plan to stay 7+ years (well past break-even), you have extra cash beyond down payment and closing costs, and you value the certainty of a lower rate. Skip points when: you might move within 5 years, your cash is limited, or rates may drop enough to refinance. In a declining rate environment, paying for a lower rate today that you will refinance away from next year wastes money.
Are Points Worth It?
Whether you are looking for a mortgage points estimator, calculate mortgage points, how to calculate mortgage points, mortgage points formula, free mortgage points calculator, or mortgage points mortgage — this free mortgage points calculator provides accurate estimates to help you plan and make informed financial decisions.
1 point = 1% of loan, reduces rate ~0.25%. On $320K: $3,200 saves $48/month. Break-even: 67 months. Only buy if staying past break-even. Tax-deductible on purchase.
What Are Mortgage Points?
Mortgage points come in two types. Discount points are prepaid interest that reduces your mortgage rate, typically costing 1% of the loan amount per point and reducing the rate by approximately 0.25%. On a $400,000 loan, one point costs $4,000 and might lower your rate from 6.75% to 6.50%, saving about $67/month. Origination points are lender fees for processing the loan and do not reduce your rate. When people discuss buying points, they usually mean discount points.
The key question is the break-even period: how long does it take for the monthly savings to recoup the upfront cost? If one point costs $4,000 and saves $67/month, break-even is 60 months (5 years). If you plan to keep the mortgage longer than 5 years, points save money. If you might refinance or sell sooner, keep your cash. The break-even math becomes more favorable on larger loans because the point cost scales with the loan but the rate reduction applies to the entire balance.
When Buying Points Makes Sense
Points make the most financial sense in three scenarios. You plan to stay long-term: if you are buying your forever home and will keep the mortgage for 15-30 years, the cumulative savings far exceed the point cost. On a $400,000 30-year loan, two points cost $8,000 but save approximately $48,000 in total interest. You have excess cash at closing: if your down payment is already at 20%+ and you have strong reserves, deploying extra cash toward points offers a guaranteed return that often beats conservative investments. Rates are high and expected to stay high: in a persistent high-rate environment, locking in a lower rate through points provides certainty and long-term savings.
Points are usually a poor choice if: you plan to sell within 5 years, you might refinance if rates drop, you need cash for other priorities like emergency reserves or home repairs, or you can use the cash to eliminate PMI by reaching 20% down instead. Use our Refinance Calculator to model different scenarios.
Tax Deductibility of Mortgage Points
Discount points are generally tax-deductible as prepaid mortgage interest. For a home purchase, points are typically deductible in the year paid. For a refinance, points must be amortized over the life of the loan. On a 30-year refinance, one point of $4,000 provides a $133/year deduction for 30 years. The deduction only benefits you if you itemize deductions rather than taking the standard deduction. With the standard deduction at $14,600 for single filers and $29,200 for married filing jointly in 2026, many homeowners find itemizing is not beneficial unless their total deductions including state taxes, mortgage interest, and charitable contributions exceed these thresholds.
Frequently Asked Questions
How to Use This Calculator
Enter your loan amount, base interest rate, and the number of points you're considering buying. Each point costs 1% of the loan amount and typically reduces your rate by 0.25%. The calculator shows your break-even timeline — the number of months it takes for your monthly savings to exceed the upfront cost of points. If you plan to stay in the home longer than the break-even period, buying points saves money.
Example: On a $400,000 loan at 6.75%, one point costs $4,000 and drops the rate to 6.50%. Monthly payment drops from $2,594 to $2,528 — saving $66/month. Break-even: 61 months (5.1 years). If you stay 10 years, you save $3,920 net. If you sell or refinance in 3 years, you lose $1,624.
Mortgage Points Explained: The Complete Guide
Mortgage points (also called discount points) are prepaid interest. You pay a lump sum at closing in exchange for a lower interest rate for the life of the loan. Each point equals 1% of the loan amount. The rate reduction per point varies by lender and market conditions but is typically 0.20-0.25% per point.
| Points bought | Cost on $400K loan | Rate reduction | New rate (from 6.75%) | Monthly savings | Break-even |
|---|---|---|---|---|---|
| 0 (no points) | $0 | — | 6.75% | — | — |
| 1 point | $4,000 | -0.25% | 6.50% | $66/mo | 61 months |
| 2 points | $8,000 | -0.50% | 6.25% | $130/mo | 62 months |
| 3 points | $12,000 | -0.75% | 6.00% | $192/mo | 63 months |
When Buying Points Makes Sense
Buy points if: You plan to stay in the home at least 5-7 years (past the break-even point). You have excess cash beyond your emergency fund and down payment. You want the certainty of a lower fixed payment for 30 years. The IRS lets you deduct points in the year you buy the home, providing an additional tax benefit.
Skip points if: You might move, sell, or refinance within 5 years. The cash would be better used for a larger down payment to avoid PMI. You're stretching to afford closing costs. If interest rates drop significantly, you'll refinance anyway, wiping out the benefit of pre-paid points.
Tax advantage: Mortgage points are tax-deductible in the year of purchase for a primary residence. On a $400K loan, 2 points ($8,000) deducted at a 24% marginal rate saves $1,920 in taxes — effectively reducing the net cost of points to $6,080 and shortening the break-even period.
Points vs Larger Down Payment
If you have $8,000 to spare at closing, should you buy 2 points or increase your down payment? On a $400K home, that $8,000 toward the down payment reduces the loan by $8,000, saving roughly $48/month on a 30-year loan and potentially eliminating PMI sooner. The 2 points save $130/month. In most cases, buying points saves more per month — but increasing the down payment builds equity faster and may eliminate PMI, which can be $100-300/month. Run both scenarios through the calculator to see which wins for your situation.