Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Months to break even
61
Monthly payment savings
$132
Upfront cost of points
$8,000
Net savings over your expected stay
$3,048
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How to use this
- 1Enter loan amount ($).
- 2Enter rate without points (%).
- 3Enter points purchased.
- 4Enter rate reduction per point (%).
- 5Enter loan term (years).
- 6Enter years you expect to keep this loan.
- 7Read your months to break even on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
Discount points let you prepay interest upfront (typically 1% of the loan amount per point) in exchange for a lower rate, usually around 0.125–0.25% per point depending on the lender and market conditions. Whether that trade makes sense depends entirely on how long you'll keep the loan: pay points and sell or refinance too soon, and you've handed the bank cash for a discount you never fully used. This calculator computes the exact monthly savings from the lower rate, divides that into the upfront cost of the points, and gives you the breakeven month — compare that against your realistic time horizon in the home to decide if points are worth buying.
Worked example
Using the values the calculator loads with:
Inputs
- Loan amount: 400000 $
- Rate without points: 6.75 %
- Points purchased: 2
- Rate reduction per point: 0.25 %
- Loan term: 30 years
- Years you expect to keep this loan: 7
Results
- Months to break even: 61
- Monthly payment savings: $132
- Upfront cost of points: $8,000
- Net savings over your expected stay: $3,048
What each field means
Inputs
- Loan amount ($)
- The loan amount used in the calculation, measured in $. Starts at 400000 $ so you have a working example on load.
- Rate without points (%)
- The rate without points used in the calculation, measured in %. Starts at 6.75 % so you have a working example on load. Accepted range: 0–12 %.
- Points purchased
- The points purchased used in the calculation. Starts at 2 so you have a working example on load. Accepted range: 0–5.
- Rate reduction per point (%)
- The rate reduction per point used in the calculation, measured in %. Starts at 0.25 % so you have a working example on load. Accepted range: 0–1 %.
- Loan term (years)
- The loan term used in the calculation, measured in years. Starts at 30 years so you have a working example on load. Accepted range: 5–30 years.
- Years you expect to keep this loan
- The years you expect to keep this loan used in the calculation. Starts at 7 so you have a working example on load. Accepted range: 1–30.
Results
- Months to break even
- Returned as a whole number and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly payment savings
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Upfront cost of points
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Net savings over your expected stay
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Is 0.25% rate reduction per point typical?
It's a common rough benchmark but varies by lender, loan type, and market rate environment — sometimes it's closer to 0.125% per point, sometimes more in volatile rate periods. Always ask your loan officer for the specific rate sheet showing the price of each point rather than assuming a standard figure.
Are mortgage points tax deductible?
Points paid on a purchase loan for your primary residence are generally deductible in the year paid if you itemize and meet IRS requirements (loan is secured by your main home, points are a standard business practice in your area, and other conditions). Points on a refinance usually must be amortized over the loan term instead of deducted immediately. Check current IRS Publication 936 guidance for your situation.
What if I sell or refinance before the breakeven point?
You lose money on the points — you paid for a discount you didn't hold long enough to benefit from. This is exactly why the 'years you expect to keep this loan' input matters more than the headline breakeven number: compare your realistic timeline honestly, including the odds you refinance again if rates drop.
Should I use extra cash for points or a bigger down payment instead?
A bigger down payment reduces your loan amount and can eliminate PMI, which is often a better guaranteed return than points, especially if you're near a PMI cutoff (typically 20% equity). Compare the point discount rate against the cost of PMI you'd otherwise pay before choosing.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Mortgage Recast vs. Refinance Calculator
Compare a lump-sum recast against refinancing when you have extra cash toward your mortgage.
Cash-Out Refinance Breakeven Calculator
Find exactly how many months until a cash-out refi's costs pay for themselves.
HELOC Draw Period Cost Calculator
See what an interest-only draw period actually costs before repayment kicks in.
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Mortgage Discount Points Breakeven Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/mortgage-points-breakeven
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/mortgage-points-breakeven" target="_blank" rel="noopener">Mortgage Discount Points Breakeven Calculator — RevenueLab</a> (2026).</p>
Source: [Mortgage Discount Points Breakeven Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/mortgage-points-breakeven) (2026).