Mortgage Points Buydown Breakeven Calculator
Find out how many months it takes for discount points to pay for themselves through a lower mortgage rate — and the lifetime interest saved.
How it works
Point cost = points% × loan · Break-even months = point cost ÷ monthly payment saving · New rate = base rate − points × rate cut per point
Discount points are prepaid interest: each point costs 1% of the loan and buys down the rate a little. The payment falls, but you spent cash upfront, so the question is how long it takes the monthly savings to repay that cash. If you keep the loan past the break-even point, the buydown was worth it; if you refinance or sell before then, you lose money on the points.
Worked example
On a $300,000 loan, two points cost $6,000 and cut the rate from 6.75% to 6.25%. The payment drops from about $1,946 to $1,847 — a $99 monthly saving. Dividing $6,000 by $99 gives a break-even near 61 months, or about 5 years. Stay in the loan longer than that and the points save you money overall.
Frequently asked questions
How much does one point lower my rate?
Typically around 0.25 percentage points per point, but it varies by lender and market. This calculator lets you set the reduction so you can match your actual loan estimate rather than a rule of thumb.
When are points not worth it?
If you might sell or refinance before the break-even point, you will not recoup the upfront cost. Points also tie up cash that could go toward a larger down payment or investments, so weigh those alternatives.
Are discount points tax-deductible?
Points paid on a primary-residence purchase are often deductible in the year paid, and on a refinance they are usually deducted over the life of the loan. Rules are specific — confirm with a tax professional.
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This is an educational estimate, not financial advice. Real results depend on rates, taxes, fees and market returns that no calculator can guarantee — confirm figures with your lender or a licensed advisor.