Mortgage Points Calculator (Break-Even)
Compute the break-even point on buying discount points for a lower mortgage rate. Includes after-tax break-even calculation.
FINANCECompute the break-even time on buying discount points to lower your mortgage rate. Shows monthly payment savings, upfront cost, before-tax and after-tax break-even, and lifetime savings if held to maturity.
1 point = 1% of loan amount, paid at closing. Typical rate reduction: 0.20-0.30 percentage points per point. Points are tax-deductible in the year paid for a primary residence purchase; amortized over loan term for a refinance. Compare loan estimates with and without points using the APR field, not just the rate.
Mortgage Points Calculator
Discount points are upfront fees you pay to your lender to reduce the interest rate on a mortgage. This calculator computes the break-even point - how long you must keep the loan before the upfront cost is recovered through monthly payment savings.
Should You Buy Points?
Points usually make sense if your break-even is shorter than how long you'll keep the loan. The average US mortgage holder keeps a loan 5-7 years before selling or refinancing, so a break-even of 60+ months is a yellow flag. If you plan to keep the home long-term and rates are unlikely to drop further, paying points can save tens of thousands over a 30-year loan.
Points are tax-deductible in the year paid for a primary residence purchase (IRS Pub 936), but must be amortized over the loan term for a refinance. Negative points (lender credits) work in reverse - you take a higher rate in exchange for closing-cost help. Always compare loan estimates with and without points using the APR field.
Estimate only. The actual rate reduction per point varies by lender, loan program, and market conditions. Get a written loan estimate before committing.