Free Mortgage Points Calculator

Mortgage Points Calculator

Should you buy discount points to lower your mortgage rate? Compare 0, 1, 2, and 3 point scenarios side-by-side — see the exact break-even date and net savings over your planned hold period.

1% cost
Per discount point
CFPB — Points explained
0.25%
Typical rate reduction
per point (varies by lender)

Mortgage Points Calculator

Loan & Points Details

Loan Amount
$
Base Interest Rate (0 points) current avg: 6.75%
%
Loan Term

Point Economics

Rate Reduction Per Point typical: 0.25%
%
1 point = 1% of loan ($4,000.00) → reduces rate by 0.25%
Custom Points to Evaluate
pts
How Long Will You Keep This Loan?
Used to determine if buying points makes financial sense

Enter your loan details to compare 0, 1, 2, and 3 discount points

1 Discount Point — Real Examples

The value of buying points depends heavily on loan size and how long you keep the loan. Here are real examples at current rates:

LoanPointsRateMonthly SavingsBreak-EvenNet at 10 yr
$300,0001 pt ($3,000)6.75% → 6.50%$64/mo47 mo$4,680
$400,0001 pt ($4,000)6.75% → 6.50%$85/mo47 mo$6,200
$500,0001 pt ($5,000)6.75% → 6.50%$107/mo47 mo$7,840
$400,0002 pts ($8,000)6.75% → 6.25%$168/mo48 mo$12,160

Assumes 1 point = 0.25% rate reduction. Actual rate reductions vary by lender. Source: CFPB Discount Points Guide.

Discount Points vs. Origination Points

Discount Points
  • Optional — you choose to buy them
  • Each point = 1% of loan amount
  • Permanently lowers your interest rate
  • Tax deductible on primary purchase
  • Appear as "Discount Points" on Loan Estimate Section A
Origination Points / Fees
  • Mandatory lender charge for processing
  • Does NOT reduce your rate
  • Generally not tax deductible
  • Vary widely between lenders (0–1%)
  • Appear as "Origination Charges" on Loan Estimate Section A

When Buying Points Makes Sense

  • You plan to stay 7+ years. Break-even on 1 point is typically 4–5 years. If you're buying your forever home, points almost always pay off.
  • You're in a higher tax bracket. The deductibility of points in the year purchased (for primary home purchases) amplifies the benefit. A $4,000 point at a 32% tax rate effectively costs $2,720.
  • Rates are high and you don't want to refinance. Buying points locks in a lower rate without needing a future refi and its associated costs.
  • You're buying a jumbo loan. The larger the loan, the greater the monthly savings per point — making break-even faster in absolute dollar terms.

When to Skip the Points

  • You'll sell or refinance within 5 years. You won't stay past break-even, so points are a pure loss.
  • You need the cash for a down payment. A larger down payment can eliminate PMI, which often saves more than discount points.
  • Rates are expected to fall. If you anticipate refinancing soon anyway, buy the higher rate now and refi later.
  • The rate reduction per point is poor. If your lender only offers 0.125% per point, that doubles the break-even. Always calculate before committing.
FAQ

Mortgage Points — Common Questions

What are mortgage discount points and how do they work?
Mortgage discount points are prepaid interest. One point = 1% of the loan amount. Paying points upfront permanently lowers your interest rate for the life of the loan. Typical rate reduction: 1 point = 0.25% (but this varies by lender, market, and loan type). On a $400,000 loan: 1 point costs $4,000 and drops 6.75% → 6.50%, saving ~$64/month. You recover the $4,000 cost in about 62 months (break-even).
Discount points vs. origination points — what's the difference?
Discount points are optional, paid to lower your rate. More points = lower rate. Origination points (or origination fees) are lender fees for processing the loan — they do not reduce your rate. Both appear on your Loan Estimate. When comparing lenders, focus on APR (which includes fees) and look for the 'discount points' line specifically. Origination fees are a cost of doing business; discount points are a trade-off you choose.
Are mortgage points tax deductible?
Discount points paid on a primary home purchase are fully deductible in the year paid if you itemize deductions (Schedule A), subject to limits under the Tax Cuts and Jobs Act. For refinances, points must be amortized (deducted equally) over the loan life. On a rental property, points are deductible over the loan term. Consult a tax advisor — the tax benefit can significantly improve the financial case for buying points.
How do I know how many points to buy?
Calculate your break-even: Cost of points ÷ Monthly savings = Break-even months. Compare that to how long you expect to keep the loan. Rule of thumb: if break-even < (planned hold period ÷ 2), strongly consider buying points. Also compare scenarios — sometimes 1 point offers better value per dollar than 2 points. Always get your lender's actual rate reduction per point before calculating.
Can I negotiate mortgage points?
Yes. Points are negotiable within limits. Different lenders offer different rate/point combinations — some quote 6.50% at 1 point; others quote 6.50% at 0 points with a slightly higher rate elsewhere. Always get Loan Estimates from 3+ lenders and compare the same rate (APR) across them. You can also ask your lender for their 'par rate' — the rate with zero points.
Can I roll points into the loan?
No — discount points must be paid upfront at closing. They cannot be rolled into the loan balance. However, some lenders offer 'negative points' (lender credits) — they pay you credit toward closing costs in exchange for a higher interest rate. This is the opposite of discount points and makes sense if you're short on cash at closing or plan to sell/refinance soon.

Compare Lenders — Find the Best Rate/Points Combo

Get personalized mortgage quotes with and without points. No impact to your credit score.

Compare Mortgage Rates Mortgage Calculator