Mortgage Points Break-Even Calculator
See how many months it takes for the monthly savings from buying mortgage discount points to repay their upfront cost.
How it works
Cost = loan × points% · Monthly saving = payment(no points) − payment(with points) · Break-even months = cost ÷ monthly saving
Discount points are prepaid interest: each point costs 1% of the loan and buys a lower rate. The trade-off is a break-even horizon — you pay cash now for a smaller payment later. If you sell or refinance before break-even, the points lose money; hold the loan longer and every month past break-even is pure savings.
Worked example
On a $320,000 30-year loan, 2 points cost $6,400 and cut the rate from 6.75% to 6.25%, dropping the payment by about $105/mo. $6,400 ÷ $105 ≈ 61 months, so the points break even in just over five years.
Frequently asked questions
When are mortgage points worth buying?
When you expect to keep the loan well past the break-even point. If your break-even is 5 years but you plan to move or refinance in 3, you would lose money on the points.
How much is one point?
One point equals 1% of the loan amount and typically lowers the rate by roughly 0.25%, though the exact reduction varies by lender and market.
Are discount points tax-deductible?
Points on a primary-residence purchase are often deductible as mortgage interest, sometimes in the year paid. Rules are specific — confirm with a tax professional.
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Educational estimate, not financial advice. Confirm figures with your lender or a licensed professional.