Mortgage Points Calculator
Should I Buy Discount Points?
Paying points upfront lowers your interest rate permanently. Find out if it is worth the cost — and exactly when you break even.
The rate your lender quoted with zero points (par rate).
Cost: $3,500 · New rate: 6.750%
Break-Even Point
4 yr 12 mo
After 4 yr 12 mo, the monthly savings cover the upfront cost
Verdict
Worth It
Break-even is 4 yr 12 mo and you plan to stay 7 yr. You recover the upfront cost and save $1,411 net over your stay. Points make financial sense for you.
1 Point — Details
All Scenarios Compared
| Points | Cost | Rate | Payment | Break-even | Net savings |
|---|---|---|---|---|---|
| 0 (par) | — | 7.000% | $2,329 | — | — |
| 0.5 pts | $1,750 | 6.875% | $2,299 | 4 yr 12 mo | $712 |
| 1 pt | $3,500 | 6.750% | $2,270 | 4 yr 12 mo | $1,411 |
| 1.5 pts | $5,250 | 6.625% | $2,241 | 5 yr | $2,098 |
| 2 pts | $7,000 | 6.500% | $2,212 | 5 yr | $2,771 |
| 2.5 pts | $8,750 | 6.375% | $2,184 | 5 yr | $3,431 |
| 3 pts | $10,500 | 6.250% | $2,155 | 5 yr 1 mo | $4,078 |
Net savings = monthly savings × stay months − upfront point cost. Click any row to select it.
Not sure how many points your lender is offering?
A licensed loan officer can give you a full Loan Estimate with the exact rate reduction per point and help you decide which option fits your financial goals.
Share This Tool
What Are Mortgage Discount Points?
Mortgage discount points are an upfront fee you pay to your lender in exchange for a permanently lower interest rate. One point equals 1% of your loan amount — so on a $350,000 loan, one point costs $3,500. In return, your lender reduces your rate, typically by around 0.25 percentage points per point, though the exact amount varies by lender and market conditions.
Points are sometimes called "buying down the rate." They are optional — you can always take the par rate (zero points) and keep your cash. Whether buying points makes sense depends entirely on one thing: how long you plan to stay in the home.
How to Use This Calculator
Step 1 — Enter your loan details
Enter the loan amount (purchase price minus down payment), the base interest rate your lender quoted with zero points, and your loan term. The base rate is your starting point — it is what you get if you pay nothing extra upfront.
Step 2 — Select how many points to buy
Choose from 0 to 3 points. The comparison table at the bottom updates in real time to show all scenarios side by side — cost, new rate, monthly payment, break-even, and net savings for every option. Click any row to see the full details for that scenario.
Step 3 — Set how long you plan to stay
This is the most important input. Buying points is only worth it if you stay past the break-even point. If there is any chance you will sell or refinance before then, keeping your cash makes more sense.
Step 4 — Adjust rate reduction per point (Advanced)
The default is 0.25% per point, which is the industry standard estimate. But your lender may offer more or less depending on market conditions. Check your Loan Estimate for the exact figure and enter it in the Advanced section for precise results.
The Break-Even Rule
The break-even point is the number of months it takes for your monthly savings to equal the upfront cost of the points. If you stay longer than the break-even, buying points puts money in your pocket. If you move or refinance before it, you lose money on the deal.
A typical break-even on one point is 3–5 years. If your break-even is under 3 years, buying points is almost always a strong move. If it is over 7 years, think carefully about whether you are confident you will stay that long. Life changes — job relocations, growing families, and refinances all cut the analysis short.
Points vs. Larger Down Payment
If you are choosing between using extra cash to buy points or to increase your down payment, the down payment often wins. A larger down payment immediately reduces your loan balance, eliminates PMI if you reach 20%, and lowers your monthly payment permanently without a break-even calculation to worry about.
That said, if you are already at 20% down and want to reduce your rate further, points become a more attractive option — especially in a high-rate environment where even a small rate reduction produces meaningful monthly savings on a large loan.
When Buying Points Makes the Most Sense
You plan to stay long-term
Points reward patience. If you are buying a forever home or planning to stay 10+ years, the math almost always favors buying points — especially at 1–2 points where the break-even is typically under 5 years.
Rates are high and likely to stay high
When rates are elevated, each fraction of a percent savings on a large loan produces bigger monthly savings. The break-even shortens, making points more attractive.
You have cash to spare after closing
Never buy points if it drains your emergency fund or requires you to put less than 20% down and pay PMI. The savings from avoiding PMI will almost always beat the savings from a lower rate.
You are not planning to refinance soon
If you expect to refinance within a few years when rates drop, buying points is usually a mistake — you will not hold the loan long enough to break even, and refinancing resets the clock entirely.
This calculator provides estimates for informational purposes only and does not constitute financial or lending advice. Actual rate reductions per point vary by lender and market conditions. Always request a Loan Estimate to compare offers.
Use this calculator on your own website