One Point Equals 1%
One point normally costs 1% of the mortgage amount. On a $300,000 loan, one point would generally cost $3,000.
Mortgage Cost Comparison
Mortgage Points Calculator
Compare the upfront cost of buying mortgage points with your potential monthly payment reduction, break-even period and long-term interest savings.
Enter Your Loan Details
Use the figures from your lender's loan estimate for a more relevant comparison.
Your Mortgage Point Analysis
Principal-and-interest estimates excluding taxes, insurance and other charges.
Break-even period
—
Enter your figures to calculate when the upfront point cost may be recovered.
Upfront point cost
$0
Monthly payment without points
$0
Monthly payment with points
$0
Monthly payment savings
$0
Savings during expected ownership
$0
Net savings after point cost
$0
Break-even guidance
Your expected loan duration will be compared with the calculated break-even period.
| Comparison | Without Points | With Points |
|---|---|---|
| Interest rate | — | — |
| Monthly principal & interest | — | — |
| Total interest over full term | — | — |
| Total cost including points | — | — |
Understand the numbers
What Are Mortgage Points?
Mortgage discount points are optional upfront fees paid to a lender in exchange for a lower mortgage interest rate. They are sometimes described as prepaid interest.
Lower Interest Rate
Paying points may reduce your quoted interest rate, which can lower the principal-and-interest portion of your monthly payment.
Break-Even Matters
The break-even point estimates how long monthly savings must accumulate before recovering the upfront cost of the points.
Upfront Cost vs. Long-Term Savings
The longer you keep the mortgage after reaching
break-even, the more useful the lower rate may
become.
How the Mortgage Points Calculator Works
The calculator compares the same mortgage at two interest rates: the lender's rate without discount points and the reduced rate offered after paying points.
1
Enter the mortgage amount
Add the amount you expect to borrow, not the home's full purchase price.
2
Add both interest rates
Enter the rate without points and the discounted rate quoted by your lender.
3
Enter the number of points
The calculator multiplies your points by 1% of the loan amount unless you provide a custom cost.
4
Review the break-even period
Compare break-even time with how long you expect to keep the mortgage.
Break-Even Formula
Break-even months = Point cost ÷ Monthly payment savings
For example, a $4,000 point cost divided by $80 in monthly savings produces an estimated break-even period of 50 months.
Buying points decision
When Mortgage Points May or May Not Make Sense
The lowest advertised rate is not automatically the least expensive option. Your decision should consider time, cash available at closing and alternative loan offers.
Points May Be Useful When
- You expect to keep the loan longer than the estimated break-even period.
- You have enough closing funds without reducing your emergency savings.
- The lender provides a meaningful rate reduction for the amount charged.
- You value a lower required monthly principal and interest payment.
Points May Be Less Useful When
- You may sell, refinance or repay the loan before reaching break-even.
- Paying points would leave you with insufficient cash after closing.
- Another lender offers a similar rate with lower fees and no points.
- The rate reduction is too small to recover the point cost within your expected timeline.
Frequently asked questions
Mortgage Points Calculator FAQs
Answers to common questions about discount points, monthly savings and mortgage break-even calculations.
One mortgage discount point generally costs 1% of the loan amount. For example, one point on a $400,000 mortgage would normally cost $4,000.
There is no universal rate reduction per point. The reduction depends on the lender, loan type, market conditions, credit profile and lock period. Use the exact rate options shown on your lender's quote.
It is the estimated time required for monthly payment savings to equal the upfront amount paid for points. It is calculated by dividing the point cost by monthly payment savings.
Not necessarily. Discount points are normally paid to reduce the interest rate. Origination charges compensate the lender for processing or making the loan and may not reduce the rate.
No. It compares principal and interest only. Property taxes, homeowners insurance, mortgage insurance, HOA fees and other closing costs are excluded.
Buying points may be less attractive when you expect to refinance before the break-even date, because you may not receive enough monthly savings to recover the upfront cost.
Financial information disclaimer
This calculator provides estimates for educational purposes only. Actual rates, payments, APR, closing costs, tax treatment and loan terms vary by lender and borrower. Review an official loan estimate and consult a qualified mortgage or financial professional before making a decision.