About the Mortgage Points Calculator
Discount points are an upfront fee you pay to lower your mortgage rate — one point costs 1% of the loan and typically cuts the rate by about a quarter percent. Whether they pay off depends on how long you keep the loan: points make sense if you stay past the break-even point. This calculator shows the cost, monthly savings, and break-even.
How it’s calculated
Cost of points = loan × points%. The reduced rate = base rate − (points × reduction per point). Monthly savings = payment at the base rate − payment at the reduced rate. Break-even months = cost of points ÷ monthly savings.
Example calculation
On a $320,000 loan, buying 1.5 points costs $4,800 and might cut the rate from 6.75% to about 6.375%, saving roughly $75/month — breaking even in a little over five years.
Frequently asked questions
What is a mortgage point?
A discount point is a fee equal to 1% of the loan that you pay upfront to lower your interest rate — commonly by about 0.25% per point, though it varies by lender.
When are points worth buying?
When you'll keep the loan past the break-even point — the month when your accumulated savings exceed the cost of the points. If you might move or refinance sooner, they may not pay off.
Are points tax-deductible?
Points paid to buy down the rate on a home purchase are often deductible, sometimes in the year paid. Tax rules vary and change, so confirm with a tax professional.
This calculator provides estimates for educational purposes and should not be considered financial, tax, or legal advice. Your actual figures may vary with lender terms, fees, and market conditions.