Mortgage Points Calculator
Find out if buying discount points saves you money over the life of your loan.
This tool is for informational and educational purposes only. It is not a substitute for professional financial, medical, legal, or engineering advice. See Terms of Service.
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Mortgage discount points let you pay upfront to reduce your interest rate. Each point typically costs 1% of your loan amount and reduces your rate by 0.25%. This calculator tells you whether buying points makes financial sense for your situation.
- Enter your loan amount. This is the total amount you plan to borrow, not the home price. If you are putting 20% down on a $375,000 home, your loan amount is $300,000.
- Set your base interest rate. This is the rate your lender quoted without any points. Check your loan estimate or pre-approval letter.
- Choose a loan term. 30 years is most common. Shorter terms change the break-even calculation since you have fewer months to recoup the upfront cost.
- Enter the number of points. Most borrowers buy 1 or 2 points. The calculator supports fractional points (e.g. 0.5 or 1.5).
- Adjust the cost per point if your lender charges something other than the standard 1% per point.
The result shows your break-even period: how many months it takes for the monthly savings to cover the upfront cost. If you plan to stay in the home longer than the break-even period, buying points saves money. If you might sell or refinance sooner, skip the points.
About Mortgage Discount Points
A mortgage point (also called a "discount point") is a fee you pay at closing to permanently reduce your interest rate. One point equals 1% of your loan amount. In return, your lender typically lowers your rate by 0.25% per point.
Points are tax-deductible in the year you pay them on a purchase mortgage. On a refinance, the deduction is spread over the loan term. Always consult a tax professional for your specific situation.
The key question is whether you will keep the loan long enough to recoup the upfront cost through lower monthly payments. This calculator gives you that answer.
Frequently Asked Questions
How much does one mortgage point cost?
One point costs 1% of your loan amount. On a $300,000 loan, one point costs $3,000. In return, your interest rate typically drops by 0.25 percentage points.
Are mortgage points worth buying?
Points are worth it if you plan to keep the loan past the break-even point. On a typical 30-year loan, the break-even for one point is usually 4 to 6 years. If you plan to stay in the home at least that long, points can save you thousands over the life of the loan.
Can I buy fractional mortgage points?
Yes. Many lenders allow you to buy 0.5, 1.5, or other fractional amounts. The cost and rate reduction scale proportionally. This calculator supports fractional points.