Mortgage Points Calculator
Paying points buys a lower rate — but only time makes them worth it. Enter the quoted rate, the bought-down rate, and the points, and get the break-even month, the monthly savings, and the full-term value.
Points break-even
Example: $300,000 loan, 6.5% → 6.25% for 1 point ($3,000) → break-even 5 yr 1 mo.
The worked trade
On a $300,000 thirty-year loan, one point ($3,000) buys the rate from 6.5% down to 6.25%: the payment drops from $1,896.20 to $1,847.15 — $49.05 a month. The savings repay the point in 5 yr 1 mo; hold the loan its full term and the point nets $14,659. Sell or refinance before the break-even and the trade loses. Every figure is computed by the same tested engine as the calculator above.
Price it against your real horizon
The full-term savings figure flatters points: the average homeowner moves or refinances well before year 30. Compare the break-even against how long you genuinely expect to keep this loan at this rate — and remember the alternative uses for the cash, like a larger down payment (which lowers the loan itself and possibly PMI; see the Down Payment Calculator). Points make the most sense for long-horizon owners in stable or rising rate environments.
Frequently asked questions
What exactly is a discount point?
Prepaid interest: one point costs 1% of the loan amount and buys a permanently lower rate — commonly around 0.25 percentage points lower per point, though the exact trade varies by lender and market. Points are distinct from origination fees, which are charges for making the loan, not rate buydowns.
How should I read the break-even?
It is the month when accumulated payment savings repay the upfront cost. Keep the loan (at that rate) longer than the break-even and the points profit; sell or refinance sooner and they lose. Your honest horizon — not the loan’s term — is the deciding input.
Why would refinancing kill the value of points?
The bought-down rate dies with the loan. If rates fall and you refinance two years after paying points with a five-year break-even, the unrecouped balance is simply gone. Buying points is implicitly a bet that rates will not drop enough to make refinancing attractive during your break-even window.
Are points tax-deductible?
Points on a purchase mortgage for a primary home are often deductible (sometimes fully in the purchase year, if you itemize); points on a refinance are generally deducted over the loan’s life. The rules have conditions — confirm with a tax professional or IRS guidance.
Not financial advice: a general educational estimate. Actual point pricing and rate reductions vary by lender and day; tax treatment has conditions. Values are processed locally in your browser and never transmitted. See the methodology page.