Mortgage Points Calculator

Mortgage discount points are upfront fees paid to the lender at closing to buy down your interest rate. Each point costs 1% of the loan amount, so one point on a $280,000 loan costs $2,800. In return, the lender reduces your interest rate, typically by about 0.25% per point, lowering your monthly payment.

The break-even period typically ranges from four to eight years, depending on the cost per point, rate reduction, and loan amount. Divide the total upfront cost by the monthly payment savings to find your specific break-even in months. Points only save money if you keep the mortgage past this break-even point.

Points paid on a mortgage for purchasing your primary residence are generally deductible in the year paid. Points on a refinance must typically be deducted over the loan term. Tax rules vary by situation, so consult a tax professional to understand how the deduction applies to your specific circumstances.

There is no universal answer because it depends on your expected ownership period, available cash, and alternative investment options. Most buyers purchase zero to two points. Use this calculator to compare scenarios and find the number of points that maximizes your net savings over your planned ownership timeline.

Discount points are optional fees you choose to pay to reduce your interest rate. Origination points are fees the lender charges for processing and underwriting the loan. Origination points do not lower your rate and are simply a cost of borrowing. Only discount points provide the rate reduction benefit.