Mortgages
Mortgage Points Calculator
Discount points are prepaid interest: you hand the lender cash at closing and they cut your rate. The whole decision is one question — will you keep this loan long enough to get the money back?
One point costs 1% of the loan and typically cuts the rate about 0.25%.
Break-even point
5 years 2 months
Keep the loan past this point and the points paid off.
- Points cost at closing
- $3,000
- Monthly saving
- $49.05
- Payment without points
- $1,896.20
- Payment with points
- $1,847.15
- Net saving if held to term
- $14,658
How this calculator works
Both payments fully amortise the same loan over the same term, one at each rate. The points cost is the loan amount × points percent. Break-even divides that cost by the monthly saving and rounds up to the next whole month.
This compares the note rates you enter and ignores everything else in the offer. Real quotes bundle origination fees, lender credits, and different closing costs, so compare full Loan Estimates rather than rates alone.
Try an example
Frequently asked questions
What is a mortgage point?
One discount point costs 1% of the loan amount and buys a lower interest rate — commonly about 0.25%, though lenders price it differently. On a $300,000 loan a point is $3,000 paid at closing, in exchange for a smaller payment every month you hold the loan.
Are points worth buying?
Only if you keep the loan past the break-even month. Divide the points cost by the monthly saving: if that lands around five years and you expect to sell or refinance in three, you lose money. If it is your long-term home and rates are unlikely to fall, points can be one of the safest returns available.
Are discount points tax-deductible?
Points paid on a purchase of your main home are generally deductible in the year you pay them if you itemise; points on a refinance usually have to be spread across the life of the loan. The rules have conditions — IRS Publication 936 covers them, and a tax professional can confirm your case.
What about lender credits — points in reverse?
Some lenders will pay part of your closing costs in exchange for a higher rate. It is the same maths inverted: you take a bigger payment now for less cash at closing. Run this calculator with the rates swapped to see how long before that trade turns expensive.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.