Enter the two monthly payments your lender quoted: one without discount points and one with them. The points payment should be lower.
Enter your loan amount, the discount points cost, both monthly payments, and how long you expect to keep the loan to see when the points break even.
About the mortgage points break-even calculator
The mortgage points break-even calculator shows how long it takes for discount points to pay off. Discount points are an up-front fee you pay the lender to lower your mortgage interest rate, which lowers your monthly payment. This tool compares the up-front cost of the points against the monthly savings and tells you the break-even month: the point where your accumulated savings have covered the cost of the points.
Enter your loan amount and the points cost (as a percentage of the loan or a dollar figure), then enter the two monthly payments your lender quoted: one without points and one with them. Add how many years you expect to keep the loan, and the tool returns the number of months to break even and whether that lands within your expected time in the loan. One discount point usually costs 1% of the loan amount and the exact rate reduction varies by lender, so use the actual payment figures from your loan estimates. This is a planning estimate, not financial advice. It does not model taxes, the deductibility of points, or the return you could earn by investing the cash instead, so confirm the numbers with your lender. The result panel links to the CFPB explainer on discount points and lender credits.
How to use
- Enter your loan amount.
- Choose whether you will enter the points cost as a percentage of the loan or a dollar amount, then enter that cost.
- Enter your monthly payment without points and your monthly payment with points, from your lender's loan estimates.
- Enter how many years you expect to keep the loan before you sell or refinance.
- Select Calculate break-even to see how many months it takes for the points to pay for themselves.
Worked examples
$300,000 loan, 1 point ($3,000), $25/month savings: break even at 120 months
Dividing the $3,000 cost by $25 of monthly savings gives 120 months, or about 10 years, to recover the points.
Keep the loan 7 years, break-even at 120 months: points likely cost more than they save
Selling or refinancing at 84 months is before the 120-month break-even, so the up-front cost is not recovered.
$4,000 points, $80/month savings: break even at 50 months
Larger monthly savings recover the cost faster: $4,000 divided by $80 is 50 months, or about 4.2 years.
Frequently asked questions
- What are mortgage discount points?
- Discount points are an optional up-front fee you pay the lender at closing to lower your mortgage interest rate, which lowers your monthly principal-and-interest payment. One point typically costs 1% of the loan amount. Paying points only makes sense if you keep the loan long enough for the monthly savings to add up to more than the up-front cost.
- How is the break-even point calculated?
- The tool divides the up-front cost of the points by the monthly payment savings the points buy, then rounds up to the next whole month. For example, $3,000 of points that save $25 per month break even after 120 months. It then compares that break-even month against how long you expect to keep the loan.
- Where do I find the two monthly payments to enter?
- Ask your lender for a loan estimate with points and one without, or for two rate quotes. Each quote lists the monthly principal-and-interest payment. Enter the higher payment as the no-points payment and the lower payment as the points payment. Using your actual quoted figures is more accurate than estimating the rate reduction yourself.
- Should I pay for points if I might move or refinance soon?
- Usually not. If you sell or refinance before the break-even month, you paid more up front than you saved in lower payments. Points tend to favor borrowers who keep the same loan well past the break-even point. This tool flags whether your expected time in the loan is before or after break-even.
- Does this calculator account for taxes or investing the money instead?
- No. It is a simple cost-versus-savings break-even and does not model the potential tax deductibility of mortgage points, the time value of money, or the return you might earn by investing the up-front cash instead. Those factors can shift the decision, so treat the result as a starting estimate and confirm with your lender or a tax professional.
- Does this tool give financial advice or store my numbers?
- No. It is a planning estimate, not financial advice. The calculation runs entirely in your browser. The tool does not collect your name, contact details, credit score, income, lender quotes, or any loan-application data, and it does not save the values you enter.
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