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Points vs No Points

Mortgage Points Calculator

Find your breakeven period and see whether buying discount points actually saves you money.

Sheet 10/11·Mortgage Points Calculator·Rev 2026-07-13·Drawn by MyLoanCalcs
Loan details
Enter your loan and points information

1 point = 1% of loan amount

Typically 0.125%--0.375%

Enter your details to see your breakeven analysis

Quick Answers

Cost of 1 point

1% of loan

Typical rate reduction

0.25% per point

Avg. breakeven

4--7 years

Points are worth it if

You stay past breakeven

Frequently asked questions

Common questions about mortgage discount points.

A discount point is an upfront fee paid to the lender at closing in exchange for a permanently lower interest rate on your mortgage. One point equals 1% of the loan amount -- so on a $300,000 loan, one point costs $3,000. Each point typically reduces your interest rate by about 0.25%, though the exact reduction varies by lender and current market conditions. Buying points is essentially prepaying interest: you pay more now to pay less each month for the life of the loan. Points appear as a line item on your Loan Estimate and Closing Disclosure.
Points make financial sense when you plan to stay in the home long enough to recoup the upfront cost through monthly savings -- this threshold is called the break-even point. Divide the cost of the points by the monthly savings they produce: if one point costs $3,000 and saves $65 per month, break-even is about 46 months. If you plan to stay 10 years, the points produce roughly $4,800 in net savings. If you might sell or refinance in 3 years, paying points is likely not worth it. The calculator above computes your specific break-even automatically.
Points paid on a mortgage to purchase your primary residence are generally fully deductible in the year paid, provided they meet IRS requirements including that they were computed as a percentage of the loan amount, clearly disclosed on your settlement statement, and used to buy or build your main home. Points paid on a refinance must typically be deducted ratably over the life of the new loan rather than all in the first year. State tax treatment varies. Consult a qualified tax professional for guidance specific to your situation, since tax rules change and individual circumstances differ.
Discount points are an optional fee you pay to buy down your interest rate -- they directly reduce your monthly payment and total interest cost over the life of the loan. Origination points are a lender fee for processing and underwriting the loan; they do not reduce your rate and are simply a cost of obtaining the mortgage. Both appear on your Loan Estimate, but only discount points should factor into your break-even analysis. When comparing lenders, make sure you understand which fees are origination charges versus discount points to make a fair comparison.
Yes -- points are negotiable, and different lenders offer different combinations of rate and points. Some lenders may offer a lower rate with more required points; others offer a higher rate with lender credits (sometimes called negative points) that offset your closing costs. Getting quotes from at least three lenders on the same day and comparing both the rate and the point structure gives you a complete picture of your options. A mortgage broker can help you compare multiple lenders simultaneously. Always ask each lender for a formal Loan Estimate, which standardizes the comparison format.

Related calculators

Mortgage CalculatorRefinance CalculatorWhat Is APR?

About this calculator

This calculator uses the standard amortization formula to compare two loan scenarios -- one with and one without discount points -- and computes monthly payment savings, breakeven period, and total lifetime savings net of the upfront point cost. The rate reduction per point is configurable; the industry convention of 0.25% per point is provided as a default.

Mortgage point conventions and APR disclosure requirements referenced on this page follow the Truth in Lending Act (TILA) and CFPB Loan Estimate standards. Tax deductibility guidance is based on IRS Publication 936 -- consult a tax professional for advice specific to your situation.

MyLoanCalcs.com provides free educational calculators and does not offer financial advice or lending services. Always compare full loan cost -- including points -- across multiple lenders before making a financing decision.

About the Author: De Van Do

De Van Do is the author and site builder behind MyLoanCalcs.com. With a background in technology, De Van Do built this site out of an interest in making financial calculations clear and accessible. De Van Do is not a licensed loan officer, mortgage broker, or financial advisor -- content on this site is for informational purposes only.