# Mortgage Points Calculator

URL: https://speedycalculator.com/calculators/finance/mortgage-points/
Last updated: 2026-10-25

> The mortgage points calculator works out whether buying discount points to lower your interest rate pays off: the cost of the points, the new rate and payment, the monthly saving and the break-even time.

## Inputs

- Original loan amount
- Mortgage term (years, months)
- Initial interest rate (%)
- Mortgage points
- Rate reduction per point (%)
- Points paid

## Results

- Cost of mortgage points
- New interest rate
- Monthly payment without points
- Monthly payment with points
- Monthly savings
- Break-even
- Interest saved over the full term

## Formula

```
Cost of points = loan × points %
New rate = original rate − points × rate reduction per point (typically 0.25%)
Break-even months = cost of points ÷ monthly saving
```

## Explanation

One discount point costs 1% of the loan and usually lowers the rate by about 0.25 percentage points. Points pay off only if you keep the loan beyond the break-even point – often 5–8 years.

### How to use the Mortgage Points Calculator

- **Original loan amount**
- **Mortgage term**
- **Initial interest rate**
- **Mortgage points**
- **Rate reduction per point**
- **Points paid**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the loan amount, term, original rate, the points you buy and the rate reduction per point.

### Tips

- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.

### Common mistakes to avoid

- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.

### Inputs explained

FieldWhat to enterOriginal loan amountAmount in your currencyMortgage termUnits: years, monthsInitial interest rateIn %Mortgage pointsA numberRate reduction per pointIn %Points paidChoose one: Upfront, Rolled into the loan

### What each result means

- **Cost of mortgage points** = [Original loan amount]×[Mortgage points]÷100
- **New interest rate** = [Initial interest rate] - [Mortgage points]×[Rate reduction per point]
- **Monthly payment without points** = pmt([Initial interest rate]÷1200, [Mortgage term], [Original loan amount])
- **Monthly savings** = [Monthly payment without points] - [Monthly payment with points]

### Example values

How the main result changes when **Original loan amount** changes and everything else stays at the example values above:

Original loan amountBreak-even (months)200,00061300,00061400,00061500,00061600,00061800,00061

## Worked example

Inputs — Original loan amount: $400,000; Mortgage term: 30 years; Initial interest rate: 6.75 %; Mortgage points: 2; Rate reduction per point: 0.25 %; Points paid: Upfront.

Results — Cost of mortgage points = $8,000.00; New interest rate = 6.25 %; Monthly payment without points = $2,594.39; Monthly payment with points = $2,462.87; Monthly savings = $131.52; **Break-even = 61 months**; Interest saved over the full term = $47,348.49.

## FAQ

**How much does one mortgage point cost?**
1% of the loan amount.

**How much does a point lower the rate?**
Often about 0.25 percentage points, varying by lender.

**Are mortgage points tax-deductible?**
Points on a home purchase are usually deductible if you itemize.

**What formula does the Mortgage Points Calculator use?**
Cost of points = loan × points %.


## Sources

- [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/)