Mortgage Points Calculator — Should I Buy Down My Rate?
Quick answer: Enter loan details, points to buy, and how long you'll keep the mortgage. See break-even and total savings.
Calculate whether buying mortgage discount points pays off for you. Each point costs 1% of the loan and typically lowers your rate by 0.25%. The math depends on how long you actually keep the mortgage — if you sell or refinance before break-even, you lost money.
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Last reviewed: April 2026Report an error
Each point = 1% of loan.
Typical 0.25%.
Points Pay Off ✓
$1,613
Points cost: $4,000 upfront. New rate: 6.750%. Monthly savings: $67. Break-even: 60 months. After 7 years: net savings of $1,613.
Points Cost
$4,000
New Rate
6.750%
Monthly Saved
$67
Break-Even
60 months
New Monthly P&I
$2,594
Net at 7yr
+$1,613
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How to Use This Mortgage Points Calculator
- 1Enter loan amount, base interest rate, and term.
- 2Enter points purchased (each = 1% of loan).
- 3Enter rate reduction per point (typically 0.25%).
- 4Enter how many years you plan to actually keep this mortgage.
- 5Read break-even months and net savings.
Frequently Asked Questions
- A "discount point" is an upfront fee equal to 1% of the loan amount paid at closing in exchange for a reduced interest rate. Typical reduction: 0.25% per point. Different from "origination points" which are lender fees.
- Only if you keep the mortgage past the break-even point — when accumulated monthly savings exceed the upfront cost. For most loans this is 4-7 years. If you'll sell or refinance sooner, points are a losing bet.
- Sometimes — purchase loans can deduct points the year paid. Refi points must be amortized over the loan term. Always consult a tax professional.
- Down payment beats points for most buyers under 30% down. Extra down payment reduces principal AND lowers PMI AND gives more equity buffer.
- "Lender credits" or negative points are the reverse — the lender pays you upfront in exchange for a HIGHER rate. Useful if you have high closing costs but plan to refi soon.
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