Mortgage Points Break-Even Calculator

How to do it

1. 1
   Step 1: Open Mortgage Points Break-Even Calculator and add your input

   Type your numbers or text, add your file, or pick the options you need. Nothing is uploaded: everything stays in your browser.

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   Step 2: What Mortgage Points Break-Even Calculator does

   Find out whether paying discount points on a mortgage pays off and when you break even.

3. 3
   Step 3: Read the result and compare

   The result appears at once. Change one value to see how the answer moves, then keep the figure that fits your case.

4. 4
   Step 4: Copy or save it

   Copy the result or download it. For an important decision, confirm it with the official source or an adviser.

About this tool

Enter the loan amount, the rate without points, how many points you would buy, how much each point lowers the rate and how long you expect to keep the loan. The calculator shows the new payment, the monthly saving, the break-even month and your net result at the end of your holding period.

What a point is

One discount point costs 1% of the loan and usually lowers the rate by about 0.25%, though lenders vary. Points are paid at closing.

Break-even

The simple break-even is the cost of the points divided by the monthly saving. The tool also compares the total cost of both loans at your holding period: payments made plus the balance still owed, with the points added to the loan that uses them. If you sell or refinance before break-even, points lose money.

Other points to weigh

If you pay the points with money you could invest, compare the return. Points can be tax deductible for a purchase loan. A rate buy-down paid by a seller works the same way but costs you nothing.

Worked example

A $400,000 30-year loan at 6.75%: one point costs $4,000 and lowers the rate to 6.50%, cutting the payment from $2,594.39 to $2,528.27, a saving of $66.12 a month. You break even after 61 months (5 years 1 month); if you keep the loan for 7 years you come out about $3,039 ahead.

Tips for best results

Check every box before you rely on a result, because one wrong digit changes the whole answer. Use the exact figures from your payslip, bill, certificate or contract, and keep a note of the date you calculated. Rates, thresholds and rules change from time to time, so for tax, fees and legal matters treat the output as an estimate and confirm with the official source named on this page. You can run as many scenarios as you like; nothing is saved or sent, and refreshing the page clears the boxes.