Mortgage Points Calculator
See whether buying mortgage points pays off. Compare the monthly payment with and without points, the upfront cost, and the break-even point in months.
Calculator by Toolsloft ↗- Monthly savings
- $97.55
- Points cost
- $6,000.00
- Break-even (months)
- 62
This calculator shows whether buying discount points pays off by comparing your monthly payment with and without points against their upfront cost. Use it to decide if the lower rate is worth the cash at closing given how long you expect to keep the loan.
How this is calculated
It computes each monthly payment with the standard amortizing formula, Payment = P*r*(1+r)^n / ((1+r)^n - 1), prices the points as the loan amount times the point count over 100, and divides that cost by the monthly savings (rounded up) for the break-even month.
How to use
- Enter the loan amount and the term in years.
- Enter the interest rate without points and the discounted rate with points.
- Enter how many points you plan to buy.
- Read the monthly savings, the upfront cost, and the break-even point in months.
Examples
- $300k, 6.5% → 6% for 2 points:
saves $97.55/mo, break-even 62 mo - 2 points on $300k:
costs $6,000 upfront
FAQ
- What is a mortgage point?
- One point equals 1% of the loan amount, paid upfront to lower your interest rate. On a $300,000 loan, one point costs $3,000.
- What is the break-even point?
- The number of months it takes for the monthly savings from the lower rate to repay the upfront cost of the points. If you keep the loan past that point, buying points pays off.
- Should I buy points?
- Buying points usually pays off only if you keep the mortgage longer than the break-even period. If you plan to sell or refinance sooner, the upfront cost may not be recovered.
- How much does one point lower your rate?
- It varies by lender, but one point typically lowers the rate by about 0.25%. Compare the exact quoted rates rather than assuming a fixed amount.
- Are mortgage points tax deductible?
- Discount points are prepaid interest and are often deductible, sometimes fully in the year paid on a home purchase. The rules vary, so confirm with a tax professional.