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
| Field | What to enter |
|---|---|
| Original loan amount | Amount in your currency |
| Mortgage term | Units: years, months |
| Initial interest rate | In % |
| Mortgage points | A number |
| Rate reduction per point | In % |
| Points paid | Choose 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 amount | Break-even (months) |
|---|---|
| 200,000 | 61 |
| 300,000 | 61 |
| 400,000 | 61 |
| 500,000 | 61 |
| 600,000 | 61 |
| 800,000 | 61 |
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 savingWorked 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.
Frequently asked questions
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 %.