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?

Tested against worked examplesHow we verify

Loan amount

Loan term

Rate without points

Rate with points

Points purchased

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

Compare scenariosTry three values of one input

Vary

Mortgage Points Calculator results for three values of Loan amount
Loan amount
Break-even point	5 years 2 months	5 years 2 months	5 years 2 months
Points cost at closing	$2,700	$3,000+$300	$3,300+$600
Monthly saving	$44.14	$49.05+$4.91	$53.95+$9.81
Payment without points	$1,706.58	$1,896.20+$189.62	$2,085.82+$379.24
Payment with points	$1,662.44	$1,847.15+$184.71	$2,031.87+$369.43
Net saving if held to term	$13,190	$14,658+$1,468	$16,122+$2,932

Every other input stays at the value you set above — currently $300,000 for loan amount. Differences are measured against the first column.

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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.

What this assumes

One point costs 1% of the loan and buys the rate reduction you enter — the exchange rate varies by lender and is negotiable.
Points are paid in cash at closing rather than financed.
The break-even assumes you keep the loan and do not refinance, which most borrowers eventually do.

What changes this number

How long you keep the loan: The whole decision. Break-even is commonly around five years, and most borrowers move or refinance sooner.
The rate reduction per point: Varies by lender; a quarter-point per point is typical but not a rule.
Loan size: Points scale with the balance, so the absolute cost and the absolute saving both grow — the break-even month does not.

A worked example

Take the 1 point, 6.5% → 6.25% scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.

What you enter

Loan amount: $300,000
Rate without points: 6.5%
Rate with points: 6.25%
Points purchased: 1

What it returns

Break-even point: 5 years 2 months
Points cost at closing: $3,000
Monthly saving: $49.05
Payment without points: $1,896.20
Payment with points: $1,847.15

Try an example

1 point, 6.5% → 6.25%2 points on a big loan Half a point

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.

Mortgage Calculator

Estimate your monthly mortgage payment with taxes, insurance, PMI and HOA — plus total interest and a full amortization breakdown. Free, fast, no signup.

Mortgage Refinance Calculator

Should you refinance? Compare payments, find your break-even month on closing costs, and see the honest lifetime cost — including the term-reset trap.

APR Calculator

See a loan's true cost. Enter the rate, term, and upfront fees to get the real APR — the number that folds points and closing costs into one annual figure you can compare across offers.

Loan Comparison Calculator

Compare two loans side by side — monthly payment, total interest, and lifetime cost — to see which is genuinely cheaper, not just the lower payment.

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.