Mortgage Points Calculator
Find your break-even month and true savings from buying down your mortgage rate with discount points.
Without Points (base rate)
With Points (bought-down rate)
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What Are Mortgage Points?
Mortgage discount points are upfront fees paid to a lender at closing in exchange for a lower interest rate. One point equals 1% of your loan amount. So on a $400,000 loan, one point costs $4,000. In exchange, your lender typically reduces your interest rate by approximately 0.25% per point, though this varies by lender and market conditions.
Break-Even Months = Cost of Points ÷ Monthly Payment Savings
When Do Points Make Sense?
Buying points is a front-loaded investment — you pay more now to save more over time. The critical question is whether you will keep the loan long enough to recoup the upfront cost through monthly savings. If you plan to sell, refinance, or pay off the loan before the break-even point, buying points costs you money.
Points make the most sense when: (1) you plan to stay in the home long-term, (2) rates are high and you want to lock in a lower rate, or (3) you have extra cash at closing and want to reduce your monthly payment permanently.
Points generally do not make sense when: (1) you plan to move or refinance within a few years, (2) you would deplete your emergency fund to pay for them, or (3) the break-even period is longer than your expected stay.
Points vs. Larger Down Payment
Another way to think about points: instead of buying down your rate, you could apply that same cash toward a larger down payment, which reduces the loan principal (and therefore all future interest). In most cases, a larger down payment produces a better financial outcome than buying points — but each situation is different. If your down payment already clears 20% (eliminating PMI), additional principal reduction has a different calculus than buying down the rate.