Mortgage Points Calculator
Is buying a lower rate worth it? Find your break-even month
Last updated: October 2026
Loan and Quotes
Until you sell, refinance or pay it off.
If you keep the loan 10 years, the points save you $12,036 after their cost.
Payment savings over that time: $15,783. Counting the lower balance you would owe, break-even comes after 48 months. Kept to the end of the term, the points save $47,348 in interest, $39,348 after their cost.
Net savings from points by year
Payment savings to date plus the lower balance owed, less the cost of the points. Below zero, the points have not yet paid for themselves.
How the points calculation works
The cost of points is the loan amount times the number of points times the cost of each point, normally 1% of the loan. The calculator works out the monthly principal and interest payment at both rates and takes the difference. The simple break-even is the cost divided by that monthly saving, rounded up to a whole month.
A lower rate also pays the balance down faster, so at any point you owe a little less. If you sell or refinance, you keep that difference. The second break-even counts it, which is why it arrives sooner than the simple one.
Worked example
On a $400,000 30-year loan, a lender quotes 6.75% with no points or 6.25% with 2 points. Two points cost $400,000 x 2% = $8,000. The payment falls from $2,594.39 to $2,462.87, a saving of $131.52 a month. Break-even: $8,000 / $131.52 = 61 months, about 5 years 1 month.
Keep the loan 10 years and the points come out $12,036 ahead after their cost, counting the lower balance. Sell after three years and they lose money.
Tax treatment of points
Points are prepaid interest. If you itemize, points on a loan to buy or build your main home can generally be deducted in full in the year you pay them when every IRS condition is met, including that the points are shown clearly on your settlement statement, are figured as a percentage of the loan, and are normal for your area. Points on a refinance, and on a second home, are generally deducted evenly over the life of the loan. If you take the standard deduction, points bring no tax benefit. Check IRS Publication 936 and Topic 504 for the full rules.
Related tools
See your full payment in the mortgage calculator, estimate the rest of your closing costs with the closing cost calculator, and see the month-by-month effect of a lower rate in the amortization schedule calculator. If you are putting less than 20% down, check whether that money would do more as down payment with the PMI calculator. Refinancing? Start with the refinance calculator.
Frequently Asked Questions
What are mortgage points?
Discount points are an upfront fee you pay the lender at closing in exchange for a lower interest rate. One point costs 1% of the loan amount, so one point on a $400,000 loan is $4,000. How much each point lowers the rate varies by lender and by day, so compare quotes with and without points on the same day.
How do I calculate the break-even point?
Divide the cost of the points by the monthly payment savings. In the example on this page, 2 points cost $8,000 and cut the payment by $131.52, so the simple break-even is 61 months. The calculator also shows a second figure that counts the faster paydown of a lower-rate loan, which brings break-even forward.
When is buying points worth it?
Points pay off if you keep the loan well past the break-even month. If you expect to sell, refinance or pay the loan off within a few years, the upfront cost usually outweighs the savings. They also make less sense if paying them means a smaller down payment that triggers or extends mortgage insurance.
Are mortgage points tax deductible?
Points can be deductible as mortgage interest if you itemize. On a loan to buy or build your main home, you can generally deduct them in full in the year you pay them if you meet all the IRS conditions, such as the points being clearly shown on your settlement statement and computed as a percentage of the loan. Points on a refinance are generally deducted over the life of the loan. See IRS Publication 936 and Topic 504, and check with a tax professional.
What is the difference between points and lender credits?
They are opposites. Points cost you money upfront to get a lower rate. Lender credits lower your closing costs in exchange for a higher rate. Credits can make sense if you expect to keep the loan only a short time or need cash at closing.
Do points lower the APR?
Points are included in the APR, so a loan with points shows an APR further above its note rate than the same loan without points. APR assumes you keep the loan for the full term, which overstates the value of points if you will move or refinance sooner. The break-even month is a more practical test.