Mortgage Points Calculator: Is Buying Points Worth It?
Compare cash-paid mortgage points with your quoted rate: monthly savings over a period you pick, the break-even month and the gain over the life of the loan.
What This Calculator Does
This mortgage points calculator sets two fixed-rate loans side by side, with the same amount and the same term. Loan A carries no points; loan B carries a package of points you pay in cash. Enter the rate your lender quoted for that package, not a generic cut per point. Savings over your chosen period and interest saved across all scheduled payments are separate results.
Who Is This For
It's built for comparing U.S. loan quotes in dollars that share a loan amount and amortization term, with every other cost in them the same.
How It Works
All six fields need your input, including the rate for the points package and an evaluation window in whole months. The math assumes you pay the points in cash and that any other costs are equal or left out. Before relying on the results, check how many payments were counted and whether the cost was recovered. Then look at the full-term interest savings and the full-term net result.
Frequently Asked Questions
What does a discount point cost?
A point costs 1% of the loan amount, before rounding to the cent. Take 2 points on a $400,000 loan: that's $8,000 in cash. The price says nothing about how much the rate drops, so enter the rate quoted for the package you picked. The 0–4 range is a limit set by the math here, not a legal cap.
Does every point lower the rate by 0.25 percentage points?
No. The calculator assumes no fixed cut per point, because a lender may price each package differently. That's why the quoted rate is a required field. Going from 6.5% to 6% lowers the rate by 0.5 percentage points, which is not a 0.5% relative cut. The numbers here are illustrations, not current rates or offers. If you buy 0 points, the quoted rate has to equal the base rate exactly.
Can I roll the cost of points into the loan?
Not in this calculator. The principal stays as entered, and the points are a separate cash payment. The fee is principal × points ÷ 100, rounded once to the cent, with an exact midpoint rounding up. Finance the fee and both the principal and the payments change, so you'd need a different comparison where the loans still match.
Is the savings figure for my chosen period the same as the interest I'd save before selling?
No. That figure adds up the gap in principal-and-interest payments between the two loans over your period; subtract the upfront points fee and you get the net. The balances left on each loan may differ. Equity, sale proceeds, taxes, early payoff, the cost of refinancing and the time value of money stay out of it.
When do the points pay for themselves?
At the first scheduled month within the term when your exact cumulative savings reach or pass the points cost. Picture a $400,000 loan over 30 years with 2 points, at 6% instead of 6.5%: it breaks even in month 62. Check that same loan at 60 months and the net after the $8,000 is still about −$195.80. Break-even means the cost is earned back, not that you've made a profit.
Why is no break-even month shown when my payment is lower?
The monthly savings can fall short of the fee before the last payment. Say you borrow a hypothetical $400,000 over a ten-year term and pay 1 point to get 6.375% instead of 6.5%: that saves about $25.40 a month. Across 120 payments the total comes to $3,047.88, still short of the $4,000 fee. Month 158 lies beyond the end of that loan. When there's no cash fee, the result gets its own status; recovery 0 means there's nothing to earn back, not an instant profit.
What if my evaluation period runs longer than the loan?
The count stops at the scheduled payoff. A ten-year loan can never exceed 120 payments, even when you type 600 months. Lifetime interest savings include every scheduled payment and leave out the points cost. The lifetime net is shown separately, with the cash paid for points subtracted once. A zero after rounding doesn't prove the figures match exactly.
What does this calculator leave out?
Anything beyond principal, interest and the points fee. Escrow, lender credits and other loan fees never enter the math, and neither does mortgage insurance that varies between your quotes. Keep those items equal or leave them out openly; when they don't match, compare the full quoted loans instead. You won't get a total loan cost or an APR here. No approval either. There's also no ruling on tax deductibility and no guaranteed return, so weigh real quotes and any early-payoff plan on their own.