Mortgage Points Calculator
Are discount points worth it? Cost, monthly saving and break-even month.
About this tool
Enter the loan amount, the rate without points, the term, the number of points and how much each point lowers the rate, and how long you expect to keep the loan. The calculator shows the cost of the points, the new rate, the monthly saving, the break-even month and the net gain or loss over your holding period.
How discount points work
Discount points are prepaid interest. Each point usually costs 1% of the loan amount and lowers the rate by around 0.25 percentage points, though lenders vary, so use the figures from your own loan estimate. On a 320,000 loan, two points cost 6,400 and take the rate from 6.75% to 6.25%, cutting the payment by about 105 a month. Dividing the cost by the monthly saving gives the break-even point, here about 61 months, or five years. Keep the loan longer and the points save money; sell or refinance sooner and they cost you. Over seven years this example comes out about 4,850 ahead, counting both the lower payments and the slightly lower balance left on the loan. Points make most sense if you expect to stay put for a long time and have spare cash at closing. Honest limits: points may be tax-deductible in some countries, and the same cash could earn a return elsewhere or reduce the loan directly, which this comparison does not include. Not financial advice. The mortgage calculator, the refinance calculator and the loan comparison calculator help compare offers. How mortgage amortization works, and why overpaying early matters explains payments.
Frequently asked questions
How much does one mortgage point cost?
Usually 1% of the loan amount, so one point on a 320,000 loan costs 3,200.
How much does a point lower the rate?
Often about 0.25 percentage points, but it varies by lender and market. Check your loan estimate.
When are mortgage points worth it?
When you keep the loan longer than the break-even period, which is the cost of the points divided by the monthly saving.
Is my data saved?
No. The calculation runs in your browser and nothing is stored or sent.