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Mortgage points calculator

See what points cost, how much they save each month, and when they pay for themselves.

Mortgage details

Example only. Enter matching lender quotes.

Include any financed fees.

1 point = 1% of the loan.

Points in dollars$9,000Paid at closing.
7 yrs
Enter exact months

Until you sell or pay off this loan. Refinancing is not guaranteed.

Compare a lender credit

Your results

$6,838 aheadWith points, if you keep the loan 7 yrs.Counts payments, remaining balance and points cost.

Monthly principal & interest

Without points$2,956.186.875% note rate
With points$2,807.416.375% note rate
Monthly savings$148.77

Break-even

61 months

From payment savings alone.

Points cost

$9,000

Paid at closing, plus other fees.

How we calculated your savings
Payment savings over 7 yrs
$12,497
Lower balance owed at payoff
$3,341
Points paid at closing
−$9,000

Break-even after 4 yrs counting the lower balance, or 5 yrs 1 mo on payment savings alone. A lower balance is less debt to repay, not a cash refund.

Other loan fees are held constant. Investment returns and tax effects are excluded. Compare Loan Estimates from the same lender, loan and date.

Taxes, insurance, mortgage insurance and HOA are extra. Example rates are not an offer.

Talk to a loan officer

Print or save as PDF. Your figures are not sent to the loan officer.

Compare quotes over time

See the year-by-year numbers.

The options side by side

Each option against no points, for the same $450,000 loan over 30 years.

MeasureNo points2 points
Rate6.875%6.375%
At closing$0$9,000
Monthly payment$2,956.18$2,807.41
Against no points—−$148.77/mo
Break-even—Recovered after 4 yrs
Ahead after 7 yrs$0$6,838
Interest over 30 years$614,225$560,668

Ahead or behind, by year

What each option has saved or cost against no points if the loan were paid off after that many years.

Paid off after2 points
1 year−$6,747
2 years−$4,488
3 years−$2,225
5 years$2,309
7 years$6,838
10 years$13,576
15 years$24,405
20 years$34,093
30 years$44,557

Ahead means the option has cost less by then: points or credit at closing, payments made, and the balance a sale or refinance would pay off. It does not count what the cash could have earned elsewhere, or any tax effect.

LENDWISE MORTGAGE · NMLS #2702455

Mortgage points comparison

Loan / term
$450,000 / 30 years
Expected payoff
84 months (7 yrs)
No-points quote
6.875%
Quote with points
6.375% at 2 points
Points cost / monthly savings
$9,000 / $148.77
Break-even: payments / including balance
5 yrs 1 mo / 4 yrs
OptionNote ratePoints / creditMonthly P&IBenefit at 84 months
No points6.875%$0$2,956.18$0
2 points6.375%$9,000$2,807.41$6,838

Assumptions and questions to review

  • Use quotes for the same loan from the same lender on the same day. Enter the total financed balance. National averages are not zero-points quotes.
  • P&I excludes taxes, insurance, mortgage insurance and HOA. Compare other fees on each Loan Estimate; this model holds those costs constant.
  • Benefit includes upfront points or usable credit, payments and the remaining principal at payoff. A lower balance is not a cash refund. Investment returns and tax deductions are excluded.
  • Lender-credit cost capacity entered: $10,000. An oversized credit has no comparison until the lender revises the quote.
  • Ask: How long might I keep this loan? Will paying points leave enough cash for closing and reserves? What if I cannot refinance?

Educational estimate from the figures entered. Not an offer, approval, rate lock or APR disclosure. Availability, eligibility and written loan terms must be confirmed by a lender. Sources and methodology: lendwisemtg.com/calculators/discount-points.

Points after 7 yrs$6,838 ahead

How this calculator works

Assumptions, examples and common questions.

How to use this calculator

Enter the loan amount and the rate you were offered with no points, then the points and the rate that comes with them, from separate matched Loan Estimates or written quotes, for the same loan and lender on the same day. Add a lender credit if you were offered one. Then set how many months you expect to keep the loan before selling or refinancing: the statement shows where the points leave you at that point, and the tables show every other year.

  • Points. Enter them as the lender quotes them. One point is 1% of the loan amount, so 2 points on $450,000 is $9,000.
  • Rates. Use quoted rates, not a rule of thumb. How far a point moves the rate changes from lender to lender and from day to day.
  • Payoff month. Compare a short and a long holding period. Refinancing is not assured.
  • Lender credit. Enter the eligible costs it can cover. A credit above those costs needs a revised lender quote; it is not treated as cash back.

How discount points work

A discount point is interest paid up front: part of the loan's cost moves to closing in exchange for a lower rate for as long as you keep the loan. The Consumer Financial Protection Bureau's explanation prices one point at 1% of the loan amount and notes that how much a point lowers the rate varies.

Points are listed on page 2 of the Loan Estimate, in section A, as a percentage of the loan amount and a dollar figure. Origination charges sit in section A too; they pay for making the loan and do not lower the rate. A lender credit runs the trade the other way: you accept a higher rate and the lender pays part of your closing costs, shown as a negative figure among the total closing costs in section J.

A seller can pay your points out of a credit, within the loan program's limit on seller contributions. Points then become one use of a negotiated seller credit, with an opportunity cost compared with other uses; the buydown calculator compares that with a temporary buydown or a lower price.

Finding your break-even

The familiar rule divides the cost of the points by the monthly savings. In the example, 2 points cost $9,000 and lower the payment from $2,956.18 at 6.875% to $2,807.41 at 6.375%, a saving of $148.77 a month, so the rule says 61 months.

That rule leaves money out. At the lower rate, more of every payment repays principal, so the balance falls faster, and if you sell or refinance you owe less. Counted that way, the same points break even after 48 months, 13 months sooner. The calculator shows both figures and uses the second in its tables.

A lender credit has the mirror-image problem. For comparison, a hypothetical 1-point credit of $4,500 at 7.125% costs $75.55 a month more, which the simple rule says takes 59 months to use up. With the slower-falling balance counted, the credit stops being the better deal after 47 months. Neither figure counts what the cash could have earned elsewhere, or taxes; money that would otherwise earn interest pushes a break-even later.

When points tend to pay

  • You expect to keep this loan well past the break-even. A home you plan to stay in, on a rate you do not expect to refinance soon.
  • The cash is not needed elsewhere. Points come after the down payment, closing costs and savings you can reach in an emergency.
  • A seller is paying. Compare points with the other eligible uses of that credit. A seller-paid cost still uses part of your negotiated budget.

They tend not to pay when you might move or refinance within a few years. If rates fall and you refinance, the points stop paying on that day, so buying them is a bet that you will keep this rate longer than the break-even. A lender credit is the opposite bet and suits a short stay or a tight budget for closing costs.

What this estimate leaves out

The comparison covers principal and interest on the same loan. It leaves out property tax, insurance and mortgage insurance, which points do not change; other closing costs; and the annual percentage rate, which spreads points and fees across the loan and appears on the Loan Estimate. Mortgage points can be deductible under IRS rules that depend on the loan and how the points were paid; IRS Publication 936 explains them, and a tax professional can apply them to you. This calculator ignores taxes.

Rates move daily. A quote with points is comparable only to a no-points quote from the same lender, for the same loan, on the same day. The written Loan Estimate is the document to compare, line by line.

Questions people ask

How much does one point lower the rate?

There is no fixed exchange rate. It depends on the lender, the loan program and the market on the day, and the second point can buy less than the first. Ask for quotes at two or three point levels on the same day and enter them here.

Are points the same as origination fees?

No. Origination charges pay the lender for making the loan; discount points buy a lower rate. Both appear in section A of the Loan Estimate, so it is worth asking which is which.

Can the seller pay my points?

Yes, as part of a seller credit, within the loan program's limit on seller contributions. The buydown calculator shows that limit for conventional, FHA and VA loans and compares points with a temporary buydown or a lower price.

Is a temporary buydown the same as buying points?

No. Points lower the rate on the note for the life of the loan. A temporary buydown leaves the note rate alone and lowers the payment for one to three years with money set aside at closing.

What is a par rate?

The rate with no points and no lender credit. It is the reference for comparing quotes, and the first rate this calculator asks for.

Do points help me qualify?

They can, modestly. Lenders qualify you on the payment at the note rate, and points lower the note rate. In the example, 2 points lower the payment by $148.77 a month.

Compare a temporary buydownEstimate the full monthly paymentCheck a refinance break-evenUnderstand mortgage pre-approvalTalk through a Loan Estimate with a loan officer

Every figure on this page is an educational estimate from the assumptions you enter. It is not a loan quote, offer, approval, rate lock, or commitment to lend, and it does not include every cost a real loan carries. Rates shown as examples or as market averages are not rates available from Lendwise Mortgage. Written loan disclosures control the terms of any actual loan. Lendwise Mortgage, NMLS #2702455.