Mortgage Points Calculator

Buying points is a prepayment of interest: you pay a lump sum at closing in exchange for a lower rate for the life of the loan. Whether it is worth it depends entirely on one thing - how long you keep the loan.

This calculator computes the cost, the monthly saving, and the number of payments required to recover the cost. Beyond that point the buydown is pure saving; before it, it is a loss.

Result

Payments to break even

62 months

Monthly saving

$52

Break-even: 5.2 years
Cost of points: $3,200
Payment without points: $1,970
Payment with points: $1,919
Saving if held to term: $15,426

You recover the 3200 paid for points after 62 payments. Selling or refinancing before then loses money on the points.

Points are usually tax-relevant in the year paid. Rules differ by country and situation - check with a tax professional.

How to use the mortgage points calculator

Enter the loan amount and the term.
Enter the rate without points and the rate with them.
Enter the number of points being charged.
Compare the break-even months against how long you expect to keep the loan.

What people use this for

Deciding whether to buy points at closing.
Comparing a seller-paid buydown against a price reduction.
Checking how long you would need to stay for points to pay off.
Testing whether cash is better spent on points or on the down payment.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

One point for a quarter-point reduction

$320,000 over 30 years, 6.25% without points against 6% with one point.

Payments to break even: 62 months
Monthly saving: $52
Cost of points: $3,200

Two points for a larger reduction

The same loan with two points buying the rate down to 5.6%.

Break-even: 4.1 years
Cost of points: $6,400
Saving if held to term: $41,570

Break-even against expected tenure

A break-even of four years is a good trade for someone staying a decade and a poor one for someone likely to move in three. The arithmetic is straightforward; the input that decides it is a prediction about your own life.

Be conservative with that prediction. Job changes, family changes and refinancing opportunities all shorten the effective life of a mortgage, and the median holding period is considerably shorter than the term.

Points are not the only use for that cash

The same money could increase the down payment, which reduces the loan and may remove mortgage insurance. It could stay as reserves, which has real value in the first years of home ownership. It could pay down a higher-rate debt.

Points only win if you keep the loan past break-even and the alternatives are worth less. That is frequently true and it is not automatic, which is why the comparison is worth doing rather than assuming.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

Points cost is the percentage applied to the loan amount. Monthly saving is the difference between the two payments.
Break-even divides the cost by the monthly saving. Lifetime saving is the monthly saving over the full term minus the cost.
The calculation assumes the loan runs to term at a fixed rate and ignores any tax treatment of points.
Results are estimates. Real quotes depend on credit, income, property, loan programme and lender pricing at the time of application.
Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator is provided for informational and educational purposes only. Results are estimates and may not reflect actual rates, fees, taxes, or market conditions.

This website is not a lender, a mortgage broker or a financial adviser. It does not originate loans, does not accept applications and does not forward your details to anyone.

Actual loan terms depend on credit history, income, the property, the loan programme and lender pricing at the time of application. Only a lender can tell you what you qualify for.

Frequently asked questions

What is a mortgage point?

One percent of the loan amount, paid at closing to reduce the interest rate. How much of a reduction each point buys varies by lender and by market.

Are points tax deductible?

Treatment varies by jurisdiction and circumstance, and rules differ between purchase and refinance. This is a question for a tax professional.

Can the seller pay the points?

In many markets yes, as a seller concession. Compare a seller-paid buydown against an equivalent price reduction - they are not always worth the same.

What if I refinance before break-even?

The points are lost. That is the risk, and it is the reason break-even matters more than lifetime saving for most borrowers.

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