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Mortgage Discount Points Calculator: Is Buying Points a Smart Move?

Compare monthly payments with and without points, see your break-even month, and estimate lifetime interest savings.

Deciding whether to pay discount points to lower your mortgage interest rate can be tricky. This calculator shows your upfront cost, monthly savings, and the break-even point—when your cumulative savings overtake the cost of the points—so you can decide if paying points fits your time horizon and goals.

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Results summary

Loan amount
$400,000.00
Term
30 years (360 months)
Upfront points cost (or credit)
$4,000.00
Monthly P&I — no points
$2,661.21
Monthly P&I — with points
$2,594.39
Monthly P&I savings
$66.82
Break-even month
60 mo
Cumulative savings @ 7 years
+$3,052.44
Total interest — no points (life)
$558,035.59
Total interest — with points (life)
$533,981.26

Cumulative Interest (by year)

Amortization schedules

Notes: “Points” are expressed as a percent of the loan amount (1.0 point = 1%). Rate reductions per point vary by lender/market; adjust the “rate with points” field to match real offers. Break-even is based on principal & interest savings only.

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What are mortgage discount points?

Discount points are prepaid interest. One point costs 1% of the loan amount and typically reduces your interest rate. The exact rate reduction per point varies by lender and market conditions. Points are optional and distinct from lender fees like “origination points.”

How do mortgage points work?

Paying points lowers your interest rate, reducing your monthly payment. Because points are paid upfront, you'll want to know if you'll keep the mortgage long enough for your lower payment to recover that initial cost.

Should you buy mortgage points?

  • Best for long time horizons (staying in the home past the break-even month).
  • Useful if you want a lower monthly payment and have cash for closing.
  • Less attractive if you may sell or refinance soon, or if cash at closing is tight.

How to use the calculator

  1. Enter your loan amount and the rate without points.
  2. Choose the number of points (or a negative number for lender credits).
  3. Adjust the rate with points (or use the helper to estimate).
  4. Set your loan term and time horizon (how long you expect to keep the loan).
  5. Review the break-even month and lifetime interest comparison.

Understanding the break-even point

Break-even occurs when your cumulative monthly savings from the lower rate equals the upfront cost of the points. After break-even, you're ahead. If you move or refinance before then, you likely won't recoup the cost.

Example calculation: Points vs. no points

Suppose a $400,000 loan at 7.00% vs. 1.0 point to buy down to 6.75% (cost $4,000). If the monthly P&I drops by ~$66, the break-even takes about 61 months (~5.1 years). Staying longer could make points worth it.

Discount points vs. lender credits

Lender credits (negative points) reduce upfront closing costs but increase your interest rate— the opposite of discount points. Credits can help if cash at closing is tight, but cost more over time.

Tax deductibility of points

Points may be deductible in certain cases. Rules vary—consult a tax professional for your situation.

Mortgage points FAQs

How many points should I buy?

Test a few scenarios. Compare your break-even month with how long you expect to keep the loan.

Are points negotiable?

Rate/point pricing is market-driven. You can usually choose among combinations of rate and upfront cost.