Mortgage Points Calculator - Are Discount Points Worth It? Break-Even Months
Mortgage Points Calculator
Break-even and net gain from buying down your rate
Break-Even Point
How many months of lower payments it takes to win back the upfront cost.
Your Time Horizon
The net gain counts lower payments and the smaller balance you owe when you sell or refinance.
Lender Terms
Set the rate cut per point and the cost per point to match your quote.
Private
Calculated in your browser.
Are Points Worth Buying?
A discount point usually costs 1% of the loan and lowers the rate by about 0.25 percentage points, although lenders vary. You pay the cost at closing and win it back slowly through smaller payments. Example: on a 400,000 loan over 30 years at 6.75%, two points cost 8,000 and cut the rate to 6.25%, saving about 131.52 a month, so they break even after 61 months (5.1 years).
If you expect to sell, move or refinance before the break-even point, the points lose money; the longer you keep the loan beyond it, the more you gain. Money spent on points could also go towards a bigger down payment instead, which may remove mortgage insurance. In the US, points on a home purchase are often tax-deductible; check with a tax adviser.
Key Takeaways
- Time is everything: Points only pay if you keep the loan past the break-even month.
- Compare quotes: Ask each lender for the rate with and without points.
- Balance counts too: A lower rate also pays down the principal faster.