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Mortgage discount points let you pay money upfront in exchange for a lower interest rate over the life of the loan — but whether that trade is worth it depends entirely on how long you plan to keep the loan.
This calculator finds the upfront cost of the points, the resulting monthly payment savings, and the break-even point in months where those savings recover the upfront cost.
How it works
Enter your loan amount, the number of points you're considering, and the interest rates with and without the points. The calculator finds the cost of the points (1% of the loan amount per point), calculates the monthly payment at both rates, and divides the points cost by the monthly savings to find the break-even point.
- Enter loan amount ($).
- Enter points purchased.
- Enter interest rate without points (%).
- Enter interest rate with points (%).
- Enter loan term (years).
- Click Calculate to see your results.
Examples
Buying 2 points on a $300,000 loan
Buying 2 points on a $300,000, 30-year loan to drop the rate from 7% to 6.5% costs $6,000 upfront, saves about $99.71/month, and breaks even in about 60.2 months — just over 5 years.
Who should use it
- Deciding whether to buy discount points when shopping for a mortgage.
- Comparing multiple lender quotes with different point/rate combinations.
Industry applications
- Mortgage lending and loan origination
- Personal finance and home-buying education
Advantages
- Calculates the exact break-even point in months, not just the monthly savings.
- Shows the total lifetime savings over the full loan term for context.
Limitations
- Assumes you keep the loan for its full term without refinancing — refinancing before break-even negates the benefit of buying points.
Common mistakes to avoid
- Buying points without considering how long you actually plan to keep the loan, which is the single biggest factor in whether points pay off.
- Comparing only the monthly payment without factoring in the upfront cost of the points themselves.
Best practices
- Compare the break-even point to your realistic expected time in the home — if you might move or refinance before the break-even point, points likely aren't worth it.
Tips
- If you're unsure how long you'll keep the loan, err on the side of not buying points — the upfront cost is only recovered if you keep the loan past the break-even point.