Mortgage Cost Comparison
Mortgage Points Calculator
Compare a mortgage with discount points against the same loan without points. Estimate your upfront point cost, monthly payment savings, break-even period, and savings at different time horizons.
Last reviewed: September 1, 2026
Mortgage Discount Points Calculator
Compare a mortgage with points against the same loan without points.
Loan & Points Details
There is no universal rate reduction per mortgage point. Enter the zero-point rate and the rate actually quoted with points so the comparison reflects the offer you are evaluating.
Your Mortgage Points Results
The point at which cumulative monthly principal-and-interest savings equal the upfront cost of the discount points.
This comparison includes cumulative P&I payment savings, the difference in remaining loan balance, and the upfront cost of the points. It does not include taxes, investment returns, refinancing costs, or the opportunity cost of cash.
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Checking options does not change your calculator estimate. Loan availability, rates, and eligibility depend on lender and borrower qualifications.
| Time Horizon | Payment Savings | Balance Advantage | Net After Points | Status |
|---|---|---|---|---|
| 1 years | $793 | $208 | −$2,999 | Behind |
| 3 years | $2,380 | $631 | −$989 | Behind |
| 5 years | $3,967 | $1,059 | +$1,026 | Ahead |
| 7 years | $5,554 | $1,485 | +$3,039 | Ahead |
| 10 years | $7,934 | $2,099 | +$6,034 | Ahead |
| 30 years (full term) | $23,803 | $0 | +$19,803 | Ahead |
Net benefit includes cumulative payment savings plus the estimated remaining-balance advantage, less the upfront cost of the points.
Important Mortgage Points Assumptions
One discount point equals 1% of the loan amount, but the interest-rate reduction associated with a point is not fixed. This calculator compares the rates you enter and assumes the points are paid upfront. It compares principal and interest only and does not model taxes, insurance, PMI, HOA fees, tax deductions, investment returns, or the opportunity cost of using cash to buy points.
What are mortgage discount points?
Mortgage discount points are an upfront charge paid to obtain a particular mortgage interest rate. One discount point equals 1% of the loan amount. For example, one point on a $400,000 mortgage costs $4,000.
Paying points can reduce the interest rate and monthly principal and interest payment, but there is no universal rule that one point reduces the rate by a specific amount. Rate-and-point combinations depend on the lender, market conditions, loan program, borrower, and transaction. For the most useful comparison, enter actual quotes from the same lender for the same loan.
How the mortgage points break-even calculation works
The simplest break-even calculation compares the upfront point cost with the monthly principal-and-interest savings produced by the lower rate.
Cost of discount points ÷ monthly P&I savings = estimated break-even months
The calculator also provides a broader time-horizon comparison that considers both cumulative payment savings and the difference in remaining mortgage balance. That can provide additional context because two loans with different rates do not necessarily have the same remaining principal balance at a given point in time.
When can buying mortgage points make sense?
You expect to keep the mortgage past break-even
The longer you keep the lower-rate mortgage after the point cost has been recovered, the more opportunity there is for the reduced interest rate to generate savings.
You have enough cash at closing
Points increase upfront costs. Buying points may be less attractive when preserving cash for the down payment, reserves, repairs, or other closing costs is more important.
The rate reduction is competitively priced
Compare the actual cost of the points with the actual rate reduction. A point does not automatically buy the same rate reduction from every lender or on every day.
You are less likely to refinance soon
Selling the home, paying off the mortgage, or refinancing before the break-even period can prevent you from recovering the upfront point cost through lower payments.
Example: one mortgage point
Suppose a borrower is considering a $400,000 mortgage. One discount point would cost $4,000. The borrower should then compare the zero-point interest rate with the lender's quoted rate after paying that $4,000.
If the lower rate saves $70 per month in principal and interest, a simple break-even estimate would be about 57 months because $4,000 divided by $70 is approximately 57. The actual comparison can be refined by examining remaining loan balances and the borrower's expected time horizon.
Mortgage points vs. lender credits
Discount points and lender credits generally move mortgage pricing in opposite directions. With discount points, you pay more upfront for a lower rate. With a lender credit, the lender contributes toward eligible closing costs in exchange for different loan pricing, commonly a higher interest rate.
Neither structure is automatically better. The right comparison depends on how much cash you want to use at closing, how long you expect to keep the mortgage, and the exact rate and cost combinations available to you.
Discount points vs. origination points
The word "points" can refer to different charges. Discount points are associated with obtaining a particular interest rate. An origination charge or origination point is a lender fee for originating the mortgage and should not automatically be treated as a rate-buydown cost.
When comparing Loan Estimates, review the rate, discount points, lender charges, lender credits, and total loan costs rather than comparing a single fee in isolation.
How to compare mortgage points correctly
Use the same loan amount and term
Keep the mortgage amount and repayment term consistent so the rate-and-points comparison is meaningful.
Enter the zero-point rate
Use the lender's quoted interest rate for the scenario that does not require discount points.
Enter the exact cost and rate with points
Use the lender's actual point charge and resulting interest rate rather than assuming a fixed rate reduction.
Choose a realistic time horizon
Estimate how long you expect to keep this mortgage before selling, refinancing, or paying it off.
Compare more than the monthly payment
Review the break-even period, remaining balance, interest cost, cash required upfront, and net savings over your expected holding period.
Are mortgage points tax deductible?
Federal tax treatment of mortgage points depends on the transaction and the taxpayer's circumstances. Some points may qualify as deductible mortgage interest, while others may need to be deducted over time or may not qualify in the same way. Tax rules can change, so do not use this calculator as a tax-deduction calculator.
For tax treatment, consult current IRS guidance or a qualified tax professional who can evaluate your specific mortgage and tax situation.
Frequently asked questions
How much does one mortgage point cost?
One discount point equals 1% of the mortgage loan amount. On a $300,000 loan, one point costs $3,000; on a $500,000 loan, one point costs $5,000.
How much does one point lower a mortgage rate?
There is no fixed rate reduction. The amount varies with lender pricing, market conditions, loan program, borrower characteristics, and the transaction. Compare actual lender quotes rather than assuming a universal reduction.
How do I know if buying points is worth it?
Compare the upfront point cost with the monthly savings and your expected time in the mortgage. If you expect to sell or refinance before break-even, the point cost may not be recovered through lower payments.
Do mortgage points reduce principal?
No. Discount points are an upfront cost associated with the mortgage rate; they do not function as an additional down payment or directly reduce the starting principal balance.
Are points included in closing costs?
Discount points are generally an upfront loan cost shown in the mortgage closing disclosures. They can increase the amount of cash needed at closing unless another permitted source is covering the charge.
Should I buy points if I plan to refinance?
A near-term refinance can shorten the period during which you benefit from the lower rate, making it more difficult to recover the upfront point cost. Compare the expected holding period with the calculator's break-even estimate.
Methodology and editorial transparency
MortgagePaymentCalculator.io is published by Family Brands LLC. Calculator results are estimates for educational and planning purposes and are not mortgage quotes, lending decisions, approvals, tax advice, or financial advice.