Mortgage Points Calculator
Calculate if buying mortgage discount points is worth it
Calculator
Points Configuration
1 point = 1% of loan amount
Typically 0.25% per point
Comparison
| Without Points | With 2 Points | |
|---|---|---|
| Interest Rate | 7.00% | 6.50% |
| Monthly Payment | $1,995.91 | $1,896.20 |
| Upfront Cost (Points) | $0 | $6,000.00 |
| Total Interest (30 yr) | $418,526.69 | $382,633.47 |
Important: Mortgage points (discount points) are prepaid interest. Each point costs 1% of your loan amount and typically reduces your rate by 0.25%. Points are often tax-deductible in the year of purchase for primary residences.
How to Use
Determine if buying mortgage points is worth the upfront cost
Enter loan details
Input loan amount and base interest rate
Set points to buy
Enter number of points and rate reduction per point
Choose loan term
Select 15, 20, or 30 year mortgage
Enter holding period
How long you plan to keep the loan
View analysis
See break-even point and total savings comparison
Break-Even Formula
Break-Even (months) = Points Cost / Monthly Payment Savings
Divide the upfront points cost by monthly savings to find when you'll recoup your investment.
Frequently Asked Questions
Mortgage points (discount points) are fees paid upfront to reduce your interest rate. One point costs 1% of the loan amount and typically reduces your rate by 0.25%. On a $300,000 loan, 1 point costs $3,000 and might lower your rate from 7% to 6.75%.
Points are worth it if you'll keep the loan long enough to recoup the upfront cost through monthly savings. Calculate your break-even point: Points Cost / Monthly Savings = Months to Break Even. If you'll stay longer than this, buying points makes sense.
It depends on your break-even timeline and available cash. Most lenders offer 0-4 points. Calculate the break-even for different amounts. Consider: will you move or refinance before breaking even? Do you have better uses for that cash? Points may be tax-deductible.
Yes, on a primary residence purchase, points are typically fully deductible in the year paid. For refinancing, they must be deducted over the loan term. Investment property points are deducted over the loan life. Consult a tax professional for your situation.