Mortgage Discount Points Calculator
Points buy a lower rate with money paid today. The question is whether you keep the loan long enough to collect.
What This Calculator Does
Discount points are priced against the rate reduction they purchase: what they cost at closing, how far they lower the monthly payment, and how many months of that saving it takes to recover the upfront outlay. Beyond that month the points turn profitable; before it, they are a loss.
Who Is This For
Created for buyers choosing between a lower rate and lower closing costs, refinancers weighing points against a shorter payback horizon, and anyone comparing lender quotes where one is priced with points and the other without.
How It Works
Supply the loan amount, the rate quoted without points, the number of points offered along with the rate reduction each buys, and how long you expect to keep the loan. The calculator returns the cost, the monthly saving, and the break-even month.
Frequently Asked Questions
What exactly is a discount point?
One discount point costs 1% of the loan amount, is paid at closing, and buys a lower interest rate for the life of the loan. Typical pricing lowers the rate by roughly 0.125-0.25% per point, though the precise trade varies by lender and shifts day to day.
How do I locate the break-even?
Divide what the points cost by the monthly payment they save. The result is the number of months you must keep the loan to recover your money. Hold it longer and you are ahead; sell or refinance sooner and you paid for a benefit never collected.
Are points worth buying?
Only where your realistic horizon comfortably clears the break-even month. Buyers expecting to move, refinance, or pay the loan down early are usually better served directing the same cash toward the down payment or keeping it in reserve.
How do points differ from origination fees?
They differ entirely, even though both are quoted as a percentage of the loan and both appear on the same page of the estimate. Discount points buy down the rate. Origination charges compensate the lender for making the loan and buy you nothing. Read the labels closely when comparing quotes.
Do points suit today's market?
With benchmark 30-year rates near 6.6-6.7% in mid-2026, many borrowers expect to refinance should rates fall, which shortens the effective horizon and argues against paying points. Where you genuinely intend to hold the loan long term, the arithmetic can still favor them. Run your own horizon instead of assuming.
Can points be deducted?
Points paid to reduce the rate on the purchase of a primary residence are often deductible, sometimes in the year paid and sometimes spread across the loan term, while points paid on a refinance are usually treated differently. That is a question for your tax advisor rather than for a calculator.