Mortgage Points Break-Even Calculator
See what discount points cost, how much they save each month and the month they pay for themselves, including the effect of paying down principal faster.
| If you keep the loan | You come out ahead by |
|---|---|
| 3 years | -$987 (behind) |
| 5 years | $1,033 |
| 7 years | $3,052 |
| 10 years | $6,064 |
| 15 years | $10,921 |
Points are usually lender-specific and the rate they buy changes daily. Whether they are tax deductible depends on your situation: ask a tax professional. The break-even month is when the savings first cover the cost; staying longer is what produces a gain.
How it works
Points cost 1% of the loan each and lower the rate by whatever your lender prices them at. The calculator compares the payment at the base rate with the payment at the lower rate. The simple break-even is cost ÷ monthly savings. The second break-even adds the balance difference between the two loans at each month, so it answers “if I sold in month m, would the points have paid for themselves?”
The optional return on cash discounts future savings, because money spent on points cannot earn anything elsewhere. Read are mortgage points worth it? for when points make sense, and compare whole offers, with every fee, in the mortgage APR calculator.
Sources and further reading
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Frequently asked questions
How do I know if mortgage points are worth it?
Compare the break-even month with how long you expect to keep the loan. If you will sell or refinance before that month, the points cost more than they save. If you will keep the loan well past it, they can pay off.
How much does one point lower my rate?
It depends on the lender, loan type and the day. Many quotes fall somewhere around a quarter of a percentage point per point, but that is not a rule. Enter the reduction from your actual quote.
Why are there two break-even numbers?
The simple one divides the cost by the monthly savings. The second also counts that a lower rate pays down principal faster, so you owe less if you sell or refinance. It is usually a little earlier.
Are mortgage points tax deductible?
Sometimes, depending on the loan and your situation. Ask a tax professional; this calculator does not include tax effects.
What is the alternative to paying points?
Taking a lender credit: a higher rate in exchange for lower upfront costs. That can make sense if you expect to move or refinance soon.
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The loan is only half the decision. Check the property's value, true monthly cost and risks with Reaixo before you commit.
Analyze a property with Reaixo →Educational Use Only: Reaixo is not a lender, mortgage broker, financial advisor, or loan originator. Calculations are estimates for informational and educational purposes only and may not include every cost associated with a mortgage. Rates, APRs, fees, taxes, insurance, mortgage insurance, eligibility, and loan terms vary by borrower, property, lender, loan program, and market conditions. Verify all figures and loan terms with a qualified lender and review your official Loan Estimate before making a financial decision.