🏷️ Mortgage Points Calculator
Should you buy mortgage points? Compare payments, find the break-even month including the lower balance, and see your net gain by years kept.
Use the rates from the same lender’s Loan Estimate, on the same day, so the only difference is the points. Enter negative points for a lender credit.
| No points | 2 points | |
|---|---|---|
| Rate | 6.75% | 6.25% |
| Upfront cost | $0 | $8,000 |
| Monthly payment (P&I) | $2,594.39 | $2,462.87 |
| Interest over the full term | $533,981 | $486,633 |
| Balance after 7 years | $363,150 | $360,134 |
| Monthly saving | $131.52 |
|---|---|
| Simple break-even (cost ÷ monthly saving) | 60.8 months |
| Break-even counting the lower balance | 48 months (4 yrs) |
Net gain from buying points, by year
| Keep loan | Net gain |
|---|---|
| 1 year | −$5,998 |
| 3 years | −$1,980 |
| 5 years | +$2,045 |
| 7 years | +$6,064 |
| 10 years | +$12,036 |
| 15 years | +$21,615 |
| 20 years | +$30,160 |
| 25 years | +$36,632 |
| 30 years | +$39,348 |
Principal and interest only; taxes, insurance and PMI are the same either way. Points on a home purchase may be tax-deductible — see IRS Publication 936 or a tax professional.
What Mortgage Points Calculator Does
This mortgage points calculator answers a common closing-table question: is it worth paying extra upfront for a lower interest rate? Enter the loan amount and term, the rate without points, the number of points and the rate they buy. It shows the cost of the points, both monthly payments and the monthly saving.
The key output is the break-even point — how long you must keep the loan before the savings repay the cost. It is shown two ways: the simple version most calculators use, and a fuller one that also counts the lower balance a lower rate leaves you with, which matters when you sell or refinance. A year-by-year table shows your net gain, and negative points let you evaluate a lender credit instead.
How to Use Mortgage Points Calculator
- Enter the loan amount and term
- Enter the rate without points, the number of points and the rate with points
- Enter how many years you expect to keep the loan
- Optionally add what the cash could earn if invested instead
- Read the break-even month and your net gain for each holding period
Formula Used by Mortgage Points Calculator
Simple break-even
Months = cost of points ÷ (payment without points − payment with points)
Worked example
$400,000 over 30 years; 2 points ($8,000) lower the rate from 6.75% to 6.25%.
- Payments: $2,594.39 vs $2,462.87
- Saving: $131.52 a month
- $8,000 ÷ $131.52 = 60.8 months
Result: About 5 years by the simple method.
Break-even counting the lower balance
Net gain after m months = payments saved + (balance without points − balance with points) − cost
Worked example
The same loan.
- The lower rate pays principal down faster every month
- Net gain turns positive in month 48
- After 7 years it is about +$6,064
Result: Four years, not five, if you sell or refinance.
Example: $400,000, 30 Years, 2 Points for a 0.5-Point Lower Rate
| Keep the loan | Net gain from points |
|---|---|
| 3 years | −$1,980 |
| 5 years | +$2,045 |
| 7 years | +$6,064 |
| 10 years | +$12,036 |
| 30 years | +$39,348 |
Discount Points vs Lender Credit
| Discount points | Lender credit | |
|---|---|---|
| At closing | You pay more | You pay less |
| Interest rate | Lower | Higher |
| Suits you if | You will keep the loan a long time | You may sell or refinance soon |
| The risk | Refinancing early wastes the cost | Keeping the loan long costs more overall |
How to Read Your Result
Why the full break-even is sooner
A lower rate means more of each payment goes to principal, so the balance falls faster. When you sell or refinance, that extra equity comes back to you. Ignoring it overstates how long points take to pay off — by about a year in the example above.
How long will you really keep the loan?
Be realistic about your plans. A move, a job change or falling rates that make refinancing attractive all end the loan early, and the savings from points stop the day the loan is paid off. If there is a real chance of that within the break-even period, points are a gamble.
The cost of the cash
Money spent on points could instead stay invested, go toward a larger down payment, or remain as an emergency fund. Enter a rate of return for that cash and the calculator charges the points for the growth you give up, which pushes the break-even later.
Limitations & Accuracy Notes
- Fixed-rate loans only; adjustable-rate loans and temporary buydowns such as a 2-1 buydown work differently.
- Property taxes, insurance and mortgage insurance are excluded because they are the same with or without points.
- Any tax deduction for points depends on your situation and is not included in the figures.