Mortgage Points Calculator

Enter your rate options and point cost — see your break-even timeline and whether buying down your rate makes financial sense for how long you plan to stay.

How Mortgage Discount Points Work

  • One discount point equals 1% of the loan amount paid upfront at closing. Each point typically lowers your interest rate by 0.20%–0.25%, though the actual reduction varies by lender and market conditions.
  • Your break-even period is how long it takes for the monthly interest savings to recover the upfront cost of the points. If you sell or refinance before breaking even, buying points costs you money.
  • Negative points (lender credits) work in reverse — the lender pays part of your closing costs in exchange for a higher rate. This makes sense if you plan to sell or refinance within a few years.

Calculation details

Methodology

Point cost equals the loan amount multiplied by points purchased divided by 100. The calculator subtracts the entered rate reduction per point from the base rate, calculates both fixed monthly payments, and divides point cost by monthly savings to estimate break-even. Net savings subtract point cost from cumulative payment savings over the selected holding period.

Assumptions and limitations

  • Actual rate reductions per point vary by lender, loan, market, and day; the entered reduction is only an assumption.
  • The model assumes the loan and monthly payment remain in place for the selected period.
  • It excludes opportunity cost, taxes, lender credits, other fees, refinance costs, and sale proceeds.
  • Monthly savings are treated as constant and are not discounted to present value.
  • Use the lender's rate sheet and Loan Estimate to compare real point options.

Worked example: two discount points

  • $400,000 loan
  • 7.0% base rate for 30 years
  • 2 points costing $8,000
  • 0.25 percentage-point rate reduction per point

The assumed rate falls to 6.5%. Monthly P&I falls from about $2,661 to $2,528, saving about $133 per month. The modeled break-even is 61 months.

Points produce modeled savings only if the mortgage remains outstanding long enough to recover the upfront cost. Compare actual lender pricing for the same lock period.

Official sources

Frequently Asked Questions

Are mortgage points worth it?

Mortgage points are worth buying if you plan to stay in the home past the break-even point — when your cumulative monthly savings equal the upfront cost. On a $300,000 loan, one point ($3,000) might lower your rate by 0.25%, saving $50/month. That's a 60-month break-even. If you'll own the home for 7+ years, it makes sense. If you'll sell or refinance within 3–4 years, skip the points.

How much does 1 mortgage point lower your rate?

One discount point (1% of the loan amount) typically lowers your interest rate by 0.20%–0.25%, though this varies by lender and market conditions. The rate reduction per point tends to be smaller in volatile rate environments and larger when rates are stable. Always ask your lender for the exact rate improvement for each point so you can calculate your actual break-even.

What are lender credits (negative points)?

Lender credits (sometimes called negative points) are the opposite of discount points. The lender gives you a credit toward closing costs in exchange for a higher interest rate. For example, accepting a rate 0.25% above market might yield $2,000–$3,000 in credits. This makes sense if you're short on cash at closing or plan to refinance within 3–5 years — you recoup the higher rate cost through the credit before your break-even.

Can you negotiate mortgage points?

Yes — points are negotiable, as is the rate reduction per point. Get quotes from multiple lenders showing their rate with zero points vs. 1 point vs. 2 points, and compare break-even periods. You can often negotiate the number of points required for a given rate or ask lenders to match a competitor's point structure. This comparison is one of the most valuable things you can do before locking a rate.

How to use this estimate

This calculator is an educational planning tool. Results are based on the figures and assumptions entered by the reader, use standard mortgage mathematics, and are not a loan offer, approval, or substitute for a lender's Loan Estimate. Taxes, insurance, fees, mortgage insurance, and available rates vary by borrower, property, lender, and location.

Review the assumptions, compare more than one scenario, and confirm the final numbers with a licensed mortgage professional before making a financial commitment.