Mortgage Points Calculator
See exactly when buying discount points pays off — and by how much over the life of your loan. Compares 0–3 points side-by-side with monthly savings, break-even month, and total interest saved.
| Points | Rate | Point Cost | Monthly Pmt | Mo. Savings | Break-Even | Total Savings* |
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Break-Even Timeline
How Mortgage Discount Points Work
A mortgage discount point is a fee paid at closing that permanently lowers your interest rate. One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000. Each point typically reduces the rate by 0.20%–0.30% — most commonly 0.25%, though the actual reduction varies by lender and market conditions.
The decision to buy points is purely a break-even calculation: you're trading upfront cash for lower monthly payments. Divide the cost of the points by the monthly savings to find the break-even month. If you expect to keep the loan longer than the break-even, buying points saves money. If you sell or refinance before break-even, the points were a loss.
Example: 1 point on a $400,000 loan costs $4,000. At 6.8% vs. 6.55% (after 0.25% reduction), the monthly payment drops from $2,608 to $2,553 — a savings of $55/month. Break-even: $4,000 ÷ $55 = 73 months (~6 years). Stay 10 years and total net savings = $55 × 120 months − $4,000 = $2,600.
Points vs. Larger Down Payment
The same cash that buys points could go toward a larger down payment — which reduces the loan amount, lowers the monthly payment, and if it gets you above 20% down, eliminates PMI. For most buyers in the sub-20%-down range, eliminating PMI by putting that cash toward the down payment produces a better return than buying points. At 20%+ down, the point calculation becomes more favorable.
For the full context on what you'll spend at closing — points plus all other fees — use the closing cost calculator. And if you're still working out what home price you can afford at these rates, start with the home affordability calculator.
Frequently Asked Questions
Are mortgage points worth it?
Only if you keep the loan past the break-even point. At a typical break-even of 4–8 years, points are worth it for buyers who plan to stay long-term and aren't likely to refinance soon. In a high-rate environment where refinancing within 2–4 years is plausible, points are often a bad bet — you're paying upfront for savings you'll never collect.
How many points can I buy?
Most lenders allow 0–4 points. Beyond 3 points, additional rate reduction is usually minimal — each extra point buys less rate reduction than the previous one. Some loan programs cap the total points charged. Confirm with your lender what rate reductions are available at each point level.
Are mortgage points tax deductible?
Yes, in most cases. Points paid on a home purchase mortgage are fully deductible in the year paid (for a primary residence meeting IRS criteria). Points paid on a refinance must be deducted ratably over the loan term. The deduction applies only if you itemize — consult a tax professional.
What's the difference between discount points and origination points?
Discount points reduce your interest rate. Origination points (or origination fees) are lender compensation for processing the loan and do not reduce your rate. On your Loan Estimate, they appear separately in Section A. Only discount points produce monthly payment savings; origination fees are purely a closing cost.
Should I buy points or put more money down?
If you're below 20% down, the extra cash usually produces better returns as a down payment (eliminating PMI, which often costs more than point savings). At 20%+ down, compare the monthly savings from points against what that cash would earn invested elsewhere. Points produce a guaranteed return (your break-even); investing produces an uncertain return. Your timeline and risk tolerance drive the decision.