Mortgage Points Calculator (US)
Find the cost, new interest rate, monthly savings, and break-even point of buying mortgage discount points — and whether it pays off for how long you plan to stay.
Conventionally, 1 point = 1% of the loan amount
A worked example
On a $400,000 loan at a base rate of 6.75%, buying 2 points (at 1% of the loan each) costs $8,000.00 and lowers the rate to 6.250%, saving $131.52 a month.
At that savings rate, the break-even point is 5 years and 1 months. If you plan to stay 7 years — longer than the break-even — buying points nets you $3,047.68 by the time you'd move.
Frequently asked questions
What is a mortgage discount point?
A discount point is an upfront fee paid to the lender, conventionally equal to 1% of the loan amount, in exchange for a lower interest rate for the life of the loan. Points are a form of prepaid interest.
How much does one point typically lower my rate?
It varies by lender and market conditions, but 0.25% per point is a common rule of thumb. Always ask your specific lender for their points-to-rate table, since it can differ meaningfully from this estimate.
What's the break-even point for buying points?
It's how long it takes the monthly savings from the lower rate to repay the upfront cost of the points. If you sell or refinance before the break-even point, buying points cost you money overall.
Are mortgage points tax-deductible?
In many cases, points paid on a primary residence purchase mortgage are deductible in the year paid (subject to IRS rules and itemizing). Points on a refinance are usually deducted gradually over the life of the loan. Consult a tax professional for your specific situation.
Is it better to buy points or make a larger down payment?
It depends on your goals: points permanently lower your rate and monthly payment for as long as you hold the loan, while a larger down payment reduces your loan amount (and may help you avoid mortgage insurance). Compare the break-even period for points against how long you plan to keep the loan.