Mortgage Points Calculator

Enter your loan, the rate with no points, and the lender's options as points and the rate each one buys. You get what each costs at closing, what it saves a month, when it truly pays for itself, and where it leaves you by the time you sell or refinance.

Loan amount ($)

Loan term

Rate with no points (%) (blank = the Freddie Mac average as of October 15, 2026: 7.40 for 30 years, 6.71 for 15)

Years you expect to keep this loan (until you sell or refinance; home sellers had owned their homes a median of 11 years)

Option A: points

Option A: rate with those points (%) (blank = estimated at 0.25 off per point)

Option B: points (optional)

Option B: rate with those points (%)

Option C: points (optional)

Option C: rate with those points (%)

What the cash could earn instead (%) (optional, after tax; for example a high-yield savings rate; blank = plain dollars)

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Data reviewed: October 2026. Figures here come from published sources and change over time. How we verify

How the mortgage points calculator works

A lender offers you a deal: pay some money at closing and get a lower rate for as long as you keep the loan. That money is points, also called discount points, and one point is 1% of the loan. On a $320,000 loan a point is $3,200. Whether it is a good trade comes down to one question the lender cannot answer for you: how long will you keep this particular loan?

Enter the loan, the rate with no points, and up to three options from your lender's quote, each as a number of points and the rate it buys. If you leave a rate blank, the page estimates it at the usual 0.25 off per point and says so. You get the cost of each option, what it saves a month, when it pays for itself counted two ways, where it stands by the time you expect to sell or refinance, and what an early refinance would do to it.

The formula

cost of points = points ÷ 100 × loan
monthly payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
usual break-even = cost ÷ monthly saving
ahead after any month = monthly saving × months + (balance with no points − balance with points) − cost

P is the loan, r is the monthly rate (the yearly rate divided by 12, as a decimal), and n is the number of payments. The last line is the true break-even: the first month it reaches zero is when the interest the points have saved covers what they cost. If you enter what your cash could earn instead, every dollar is brought back to today's dollars at that rate before it is counted.

Worked example

A $320,000 loan at 7.40% over 30 years is $2,215.62 a month. The lender offers two options.

1 point costs $3,200. At the usual 0.25 per point it buys the rate down to about 7.15%, a payment of $2,161.30: $54.31 a month less.
2 points cost $6,400 and buy about 6.90%, a payment of $2,107.52: $108.09 a month less.

The usual break-even divides the cost by the monthly saving: 4 years 11 months for 1 point, 5 years for 2. Counted the way that matters, by the interest saved, both pay for themselves after 4 years, nearly a year sooner. Keep the loan 11 years and 1 point comes out about $5,688 ahead, 2 points about $11,350 ahead.

Refinance after 3 years instead and the same points leave you $787 and $1,575 behind. If the lender actually quotes 7.125% for 1 point and 6.875% for 2, they pay for themselves in 3 years 8 months and 3 years 10 months. If your $3,200 could earn 4% in a savings account, 1 point needs 4 years 5 months.

Why the usual break-even is a little too cautious

Most points calculators divide the cost by the monthly saving and stop. That treats the whole payment saving as money in your pocket, and it misses half of what a lower rate does. Every payment is part interest and part principal. At a lower rate less of each payment goes to interest, so more of it goes to your balance, and you owe less every month than you would have at the higher rate.

That smaller balance is real money the day you sell or refinance. What points really buy is interest saved, and counting it that way pulls the break-even forward, here from 4 years 11 months to 4 years. It is the same method the refinance calculator uses, and for the same reason: the payment is only part of the story.

More points do not pay back faster

Look at the example again: 1 point and 2 points both break even after 4 years. That is not a coincidence. When each point buys about the same cut in the rate, two points cost twice as much and save twice as much, so they reach the finish line at the same moment. The size of the loan does not move it either: a point on a $150,000 loan and a point on a $900,000 loan pay back in the same month. What changes is the stakes. Stay 11 years and the second point doubles your gain. Refinance in 3 and it doubles your loss.

So the price per point decides how fast points pay off, and the number of points is really a question about how sure you are of the stay. Real rate sheets often charge more for each extra point, which makes the second point slower than the first. Put the lender's actual quotes in the rate boxes and the page will show you exactly where that happens.

Points and refinancing

Points belong to the loan that bought them. Sell the home or refinance, and the lower rate ends with that loan, while the cash you paid for it is gone. When rates are high, a refinance in the next few years is a real possibility, and a break-even of 4 or 5 years means a refinance before then turns points into a cost you never get back. That is a fair reason to put the stay a little shorter than you might guess, and the table in your result shows where you would stand at every point along the way.

If a seller is offering a credit rather than you paying points yourself, the choice is different: the money could also come off the price or pay for a temporary 2-1 buydown. The buydown calculator compares all three side by side.

Points and taxes

The page does not count taxes, because most households take the standard deduction. If you itemize, the IRS lets you deduct points paid to buy your main home in the year you pay them, when they meet its conditions: among them, they show clearly as points on your settlement statement and you paid at least that much at closing from your own funds. Points on a refinance are deducted a little at a time over the life of the loan. IRS Topic 504 has the full list, and a tax preparer can tell you whether it changes your answer.

Sources

Where the numbers on this page come from. We go to the body that publishes the figure, not to another calculator. Figures on this page were checked against these sources in October 2026. See how we verify.

Primary Mortgage Market Survey, Freddie Mac. The 30-year fixed average of 7.40 percent and the 15-year average of 6.71 percent as of October 15, 2026, the defaults for a blank rate.
Americans are paying upfront fees seeking to lower interest rates on mortgages, Consumer Financial Protection Bureau. One discount point is a fee of 1 percent of the loan amount, and points have no fixed value in terms of the change in rate.
Compliance Risks for Unearned Discount Points, Federal Reserve Bank of San Francisco, Consumer Compliance Outlook. Each point costs 1 percent of the loan and usually lowers the rate by 25 basis points: the rule of thumb used when a rate box is blank.
Topic no. 504, Home mortgage points, Internal Revenue Service. Points paid to buy a principal residence can be deducted in the year paid by those who itemize and meet the listed conditions; points to refinance are deducted over the term of the loan.
Top 10 takeaways from NAR's 2025 Profile of Home Buyers and Sellers, National Association of Realtors. Home sellers had owned their homes a median of 11 years before selling: the default stay.

Frequently asked questions

How do mortgage points work?

You pay a fee at closing and the lender gives you a lower interest rate for the life of the loan. One point is 1% of the loan, so on a $320,000 loan a point costs $3,200. The Consumer Financial Protection Bureau notes that points have no fixed value in terms of the rate, so the cut each point buys comes from your lender's quote.

How much does one point lower your rate?

Usually about 0.25 of a percentage point, so 7.40% might become 7.15% for one point. It varies by lender and by day, and each extra point often buys a little less than the one before. Ask for a written quote at each point level and enter it to get your real answer.

How do you calculate the break-even on mortgage points?

The usual way divides the cost by the monthly saving: $3,200 for 1 point that saves $54.31 a month is 4 years 11 months. Counting interest saved instead, which includes the faster drop in your balance at the lower rate, the same point pays for itself after 4 years. This page shows both.

Are mortgage points worth it?

They are worth it if you keep the loan past the break-even and not if you sell or refinance before. On a $320,000 loan at 7.40%, 1 point is about $5,688 ahead after 11 years but $787 behind after 3. How confident you are about the stay is the whole decision.

What happens to mortgage points if I refinance?

They end with the old loan. The lower rate goes away and the cash you paid is not returned, so a refinance before the break-even makes the points a cost you never recover. That is why buying points makes the most sense when you expect to keep the loan for many years.

Is it better to buy points or put more money down?

On a $320,000 loan at 7.40%, $3,200 more down saves $22.16 a month and never loses money: about $700 of interest saved by 3 years and $2,433 by 11. The same $3,200 as 1 point saves $54.31 a month but is $787 behind at 3 years and $5,688 ahead at 11. A short stay favors the down payment, a long one favors points, and with less than 20% down a bigger down payment may also lower mortgage insurance.

Are mortgage points tax deductible?

Often, if you itemize. Under IRS Topic 504, points paid to buy your main home can be deducted in the year you pay them when they meet the listed conditions, such as showing clearly as points on your settlement statement. Points on a refinance are deducted a little each year over the life of the loan.

What is the difference between discount points and origination points?

Discount points buy a lower interest rate. Origination points, or an origination fee, pay the lender for making the loan and do not lower the rate at all. Both can be quoted as a percent of the loan, so check which one you are looking at on your Loan Estimate: only discount points belong in this calculator.