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Mortgage Points Break-Even Calculator

A lender offers you a lower rate — for a price. Enter the loan, the two rate quotes, the points, and how long you’ll keep the mortgage. This calculator finds the month the buy-down pays for itself, your net savings over the stay, and a plain-English verdict.

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When do the points pay off?

One point = 1% of the loan, paid upfront at closing. On the defaults ($400,000 loan, 7.00% with no points vs 6.625% with 1.5 points, 7-year stay): $6,000 in points buys $99.97/mo of savings, breaks even in 60 months, and nets +$2,397 over the stay.

The mortgage balance you’re buying the rate down on — after the down payment.

The rate the lender quotes with zero points. Use the exact quote, not a round number.

1 point = 1% of the loan, paid upfront at closing. Typical offers run 0–3 points.

The lower rate the lender offers if you pay the points. One point usually buys ~0.25% — but check the quote.

How long you’ll keep this mortgage before selling or refinancing. Selling early can erase the win.

Break-even point—Enter your loan, rates, and points
Monthly P&I · no points—
—monthly savings
Monthly P&I · with points—

Enter your numbers above.

How it works: monthly P&I = loan × r(1+r)n ÷ ((1+r)n − 1), 30-year fixed, r = APR ÷ 12. Points cost = points% × loan. Break-even month = points cost ÷ monthly savings. On the defaults: $6,000 ÷ $99.97 = 60 months; over a 7-year stay you save $99.97 × 84 − $6,000 = +$2,397. Nothing you type leaves your device.

One question, answered in months

Discount points are prepaid interest: you hand the lender cash at closing and they permanently lower your rate. The only question that matters is how long it takes the monthly savings to repay the upfront cost — the break-even point. Before that month, the points are losing you money; after it, every payment is pure savings. This page divides the first number by the second.

Output · formula · meaning

OutputFormulaWhat it means
Points costpoints% × loanThe upfront price of the buy-down: $6,000 on the defaults (1.5% of $400,000).
Monthly P&I, no pointsloan × r(1+r)n ÷ ((1+r)n − 1), r = 7.00% ÷ 12Your payment at the higher rate: $2,661.21/mo.
Monthly P&I, with pointssame formula, r = 6.625% ÷ 12Your payment at the bought-down rate: $2,561.24/mo.
Monthly savingsno-points P&I − with-points P&IThe return on the $6,000: $99.97/mo.
Break-even pointpoints cost ÷ monthly savings$6,000 ÷ $99.97 = 60 months — the month the buy-down pays for itself.
Net over planned staysavings × stay months − points cost+$2,397 over a 7-year stay — 24 months of savings beyond break-even.

Worked example: the $400,000 loan at 7.00% vs 6.625%

Loan $400,000, 30-year fixed. No-points quote: 7.00% → monthly rate r = 0.07 ÷ 12, P&I = $2,661.21. With-points quote: 6.625% for 1.5 points → P&I = $2,561.24. Monthly savings: 2,661.21 − 2,561.24 = $99.97. Points cost: 1.5% × $400,000 = $6,000. Break-even: $6,000 ÷ $99.97 = 60 months (5 years). Net over a 7-year stay: $99.97 × 84 − $6,000 = +$2,397. The verdict reads points win: break-even lands at month 60, two full years before the planned exit — every payment after that is money the points earned you.

The three verdicts, in plain English

Points win — break-even lands comfortably inside your stay (month 60 of 84 here). The savings after break-even are the reward for keeping the loan. Marginal — break-even falls inside the stay but barely; you’re ahead on paper, yet selling or refinancing a few months early would erase it. Points lose — break-even is beyond your planned stay, so you walk away still behind. In that case the no-points rate (or a lender credit, the mirror image) is the better deal.

Who uses this

  • Homebuyers: deciding whether the discount-points line on the loan estimate is worth paying, before signing day.
  • Refinancers: weighing a points buy-down against a lender credit that pays closing costs instead.
  • Mortgage advisors: walking a client through the break-even math in the room where the decision gets made.
  • Students & researchers: seeing amortization in action — a 0.375% rate delta, fully priced out.

Accuracy & limitations

This is 30-year fixed-rate P&I math — principal and interest only; property tax, insurance, PMI, and HOA aren’t in the savings (run the mortgage calculator for the full PITI picture). The tax deductibility of points is ignored — see the guide below for that. It assumes you keep the loan for the full planned stay; refinancing or selling resets the clock and strands any unrecovered points. The rate cut per point varies by lender and by day — always enter the two actual quotes, never the 0.25%-per-point rule of thumb. Figures round to cents. This page does arithmetic, not lending advice.

For the full picture, read are mortgage points worth it, see the points-vs-credit trade in how closing costs are calculated, and itemize your own closing lines in the closing cost estimator.

Cite this calculatorBright Side Kit. “Mortgage Points Break-Even Calculator.” brightoolbox.com, 2026.Bright Side Kit. "Mortgage Points Break-Even Calculator." https://brightoolbox.com/mortgage-points-break-even-calculator/ Accessed October 22, 2026.
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Frequently asked questions

Are mortgage points tax deductible on a primary residence?

Generally yes. The IRS treats discount points as prepaid mortgage interest, deductible on a primary residence. They’re usually deducted ratably over the life of the loan rather than all in year one — so points on a 30-year loan are spread across 30 tax years. Tax rules change and personal situations differ, so confirm with a tax professional before counting on it.

What’s the difference between points and a lender credit?

They’re mirror images. Discount points: you pay cash now for a lower rate. A lender credit: the lender pays toward your closing costs in exchange for a higher rate. Points win when you keep the loan long; credits win when you’ll refinance or sell soon. Compare the totals in the closing cost estimator.

Do points make sense if I might refinance early?

Only if you keep the loan past break-even. Refinancing replaces the loan — and any unrecovered points are gone for good. If there’s a real chance you refinance within a few years, run this calculator with that shorter stay and see whether the verdict flips to “points lose.”

How many points can I buy?

Most lenders offer 0 to 3 points; some cap lower. This calculator accepts up to 10 for modeling unusual offers, but if a quote offers more than 3, check that you’re comparing real discount points and not origination fees dressed up as points.

Is one point always worth a 0.25% rate cut?

No — 0.25% per point is the industry rule of thumb, but the actual trade varies by lender and by day. On the defaults here, 1.5 points buys a 0.375% cut (exactly 0.25 each), but your lender’s sheet decides yours. Always enter the two quoted rates, never the rule of thumb.

What happens if I sell before the break-even month?

You lose the unrecovered portion of the points cost. The math is sunk-cost logic: the points were a bet on staying, and selling early forfeits the payoff. That’s exactly the “points lose” verdict — enter your honest best guess at the stay, not the rosiest one.

Do points lower my monthly payment or just total interest?

Both — permanently, unlike a temporary rate buydown. The lower rate shrinks every monthly P&I payment and the lifetime interest, starting from month one. The catch is only the upfront cost, which is why the break-even decides everything.

Related calculators

Mortgage CalculatorPITI, PMI, amortization schedule & 28% check.Refinance Break-Even CalculatorWhen a lower rate repays its closing costs.Closing Cost EstimatorEvery fee itemized — points vs lender credits.Are Mortgage Points Worth It?The full break-even guide with a worked example.How Closing Costs Are CalculatedWhere points sit in the closing bill.How Mortgage Payments Are CalculatedThe amortization math behind the payment.