Mortgage Points Calculator
Discover if buying discount points will save you thousands on your home loan
Calculator Inputs
$
Enter your total loan amount
%
Current market rate without buying points
1.000 points
1 point = 1% of loan amount. Increments of 0.125 available
%
Typically 0.25% per point, but varies by lender
Length of your mortgage
The Complete Guide to Mortgage Points: How to Use Our Premium Calculator & Save Thousands
What Are Mortgage Points and Why Should You Care?
Mortgage points, also known as discount points, are one of the most misunderstood yet potentially lucrative aspects of home financing. Simply put, mortgage points are fees you pay upfront to your lender in exchange for a reduced interest rate on your home loan. Think of them as prepaid interest that buys you long-term savings.
One point costs 1% of your total loan amount. On a $300,000 mortgage, one point would cost $3,000. In return, your interest rate typically drops by 0.25% (though this varies by lender and market conditions). This upfront investment can translate to tens of thousands of dollars in savings over the life of your loan—but only if you plan to stay in your home long enough to break even.
Our premium mortgage points calculator takes the guesswork out of this critical financial decision. Unlike basic calculators, our tool provides real-time break-even analysis, lifetime savings projections, interactive visualizations, and personalized recommendations based on your unique situation. Whether you’re a first-time homebuyer or refinancing your current mortgage, understanding points can mean the difference between wasting money and building wealth.
How to Use the Mortgage Points Calculator: Step-by-Step Guide
Using our calculator is intuitive and takes less than 60 seconds. Here’s exactly how to get the most accurate and actionable results:
Step 1: Enter Your Loan Amount
Input the total amount you’re borrowing. This is typically your home purchase price minus your down payment. For example, if you’re buying a $400,000 home with 20% down ($80,000), your loan amount is $320,000. The calculator accepts any value from $1,000 to $10 million, in increments of $1,000.
Step 2: Input Your Base Interest Rate
Enter the interest rate you’d qualify for without purchasing any points. This is your starting rate—the baseline against which all savings are measured. You can get this rate from lender quotes or current market averages. Our calculator accepts rates from 1% to 15% with two decimal precision (e.g., 7.50%).
Step 3: Select How Many Points to Buy
Use the interactive slider to choose your desired number of points, from 0 to 5. The slider moves in precise 0.125-point increments, reflecting real-world lender options. As you adjust the slider, you’ll see the exact point value update in real-time. Not sure what to choose? Start with 1 point—a common starting point for most borrowers.
Step 4: Confirm Your Rate Reduction Per Point
While most lenders reduce your rate by 0.25% per point, this varies. Some might offer 0.375% reductions during promotions, while others might only offer 0.125% in high-rate environments. Enter the specific reduction your lender quoted you. This dramatically impacts your break-even timeline and overall savings.
Step 5: Choose Your Loan Term
Select between 10, 15, 20, or 30 years. The longer your loan term, the more time you have to accumulate savings from points, but also the longer it takes to break even. Most homebuyers choose 30-year fixed mortgages, but if you’re refinancing or can afford higher payments, shorter terms build equity faster.
Step 6: Click “Calculate Savings Analysis”
Our calculator instantly processes your inputs and reveals a comprehensive analysis. The button shows a subtle loading animation, then smoothly scrolls you to your personalized results.
Understanding Your Results: A Deep Dive Into the Numbers
Once you click calculate, you’ll receive a wealth of actionable information. Here’s how to interpret each section:
Summary Cards: Your Financial Snapshot at a Glance
The four summary cards give you instant answers:
Cost of Points: The exact upfront investment required. On a $300,000 loan at 1 point, you’ll see $3,000. This amount is due at closing in addition to your down payment and other fees.
Monthly Savings: How much your payment drops each month. If buying 1 point reduces your payment by $62, that’s $744 per year staying in your pocket instead of going to the lender.
Break-Even Point: The most critical number. This tells you how many months until your monthly savings recoup the upfront cost. If your break-even is 48 months and you plan to stay in the home for 10 years (120 months), you’ll come out ahead by 72 months of pure savings.
Total Lifetime Savings: The big-picture number. After break-even, every dollar saved is profit. Over a 30-year loan, this can exceed $15,000-$30,000 depending on your loan size and rate reduction.
Detailed Comparison Table: Side-by-Side Analysis
This table breaks down exactly how your loan changes with points:
- Interest Rate: See your before/after rates
- Monthly Payment: Compare exact payment amounts
- Total Interest: The most eye-opening figure—see how many thousands you’ll save in interest over the life of the loan
Interactive Savings Chart: Visualize Your Wealth Building
The animated chart shows your cumulative savings year by year. You’ll see:
- Initial Dip: The first months show negative savings (your upfront cost)
- Break-Even Line: The point where the line crosses into positive territory
- Exponential Growth: Watch savings accelerate as you pay less interest and more principal
Advanced Features & Pro Tips
Real-Time Calculations
Unlike static forms, our calculator updates as you type. Adjust any input and watch all numbers update instantly. This lets you quickly test different scenarios without page reloads.
Save Your Analysis
Click “Save Results” to store your calculation in your browser’s local storage. Perfect for comparing multiple loan scenarios or revisiting numbers when talking to lenders. Your data stays private and secure on your device.
One-Click Social Sharing
Found a great deal? Share your results with co-buyers, family, or your financial advisor. Our share feature generates pre-written posts for each platform, making it easy to show others your potential savings.
Mobile-Optimized Experience
Whether you’re house hunting on your phone or analyzing options on your tablet, the calculator adapts seamlessly. All features work identically across devices, and the design is thumb-friendly with large tap targets.
When Should You Buy Mortgage Points? Expert Strategies
✅ Buy Points When:
- You’re Staying Long-Term: Plan to live in the home for at least 3-5 years beyond the break-even point. The longer you stay, the more you save.
- You Have Extra Cash: After down payment and emergency fund, you have surplus funds for closing costs.
- Rates Are High: When market rates are elevated, buying points provides more dramatic relative savings.
- You’re Refinancing: If you’re refinancing and have equity, rolling points into the loan can still save money if break-even is quick.
- Tax Benefits Apply: Points may be tax-deductible in the purchase year (consult your tax advisor).
❌ Skip Points When:
- Short-Term Ownership: If you might move within 5-7 years, you may not break even.
- Limited Cash: Prioritize emergency funds over points. Don’t drain savings for a marginal benefit.
- Better ROI Elsewhere: If you can invest the point cost for higher returns elsewhere, do that instead.
- ARM Loans: On adjustable-rate mortgages, points only reduce the initial fixed period, making break-even harder.
Real-World Example: The Smith Family Decision
Let’s walk through a realistic scenario:
John and Sarah Smith are buying a $500,000 home with 20% down ($100,000), leaving a $400,000 loan. Their lender offers:
- 7.5% rate with 0 points
- 7.25% rate with 1 point ($4,000 cost)
- 7.0% rate with 2 points ($8,000 cost)
Scenario 1: 1 Point
- Monthly payment drops from $2,797 to $2,741 ($56 savings)
- Break-even: 71 months (5.9 years)
- Total 30-year savings: $16,160
Scenario 2: 2 Points
- Monthly payment drops to $2,661 ($136 savings)
- Break-even: 59 months (4.9 years)
- Total 30-year savings: $40,960
The Smiths plan to stay for 15+ years, so 2 points makes sense. They’ll break even in year 5, then save $1,632 annually for the remaining 10 years.
Frequently Asked Questions
Q: Are mortgage points negotiable? A: Absolutely. While the rate reduction formula is often standardized, you can negotiate the cost. Some lenders offer “lender credits” that work in reverse—you accept a higher rate for lower closing costs. Always get quotes from multiple lenders and use our calculator to compare their point structures.
Q: Can I buy partial points? A: Yes! Our calculator supports 0.125-point increments. Buying half a point (0.5%) on a $400,000 loan costs $2,000 and might reduce your rate by 0.125%. This flexibility lets you fine-tune your investment to match your exact cash situation.
Q: What if I refinance before breaking even? A: You lose the remaining value of your points investment. That’s why break-even analysis is crucial. Some lenders offer “point refinancing” where you can keep your points if refinancing with them, but this is rare. Always consider your likelihood of refinancing when buying points.
Q: Are points tax deductible? A: On purchase mortgages, points are typically fully deductible in the year paid. On refinances, you must deduct them over the loan term. Always consult a qualified tax professional, as rules change and depend on your specific situation, loan type, and income level.
Q: How do points affect my APR? A: Points increase your APR (Annual Percentage Rate) because they represent prepaid interest. A loan with points will show a higher APR than its stated rate. Our calculator helps you see the true cost over time, which APR alone doesn’t always reveal clearly.
Q: Can I roll points into my loan? A: Sometimes, but this reduces the benefit. Rolling points into the loan means you’re financing them at interest, which extends your break-even period. It’s only advisable if you absolutely cannot pay upfront and plan to stay in the home for a very long time.
Q: What’s better: bigger down payment or points? A: It depends. A bigger down payment reduces your loan amount and may eliminate PMI. Points reduce your interest rate. If you’re putting down less than 20%, prioritize down payment to hit that threshold first. After 20%, compare the ROI of points vs. additional down payment on a calculator.
Q: Do all lenders offer the same point structure? A: No! Each lender sets their own rate reduction per point, and these vary daily with market conditions. A loan officer at Bank A might offer 0.25% per point while Bank B offers 0.375% on the same day. Always shop around and compare multiple Loan Estimates.
Q: Can I buy points after closing? A: No. Points must be purchased at closing. However, you can “recast” your mortgage (make a large principal payment and recalculate payments) or refinance later if rates drop. Neither is the same as buying points after the fact.
Q: What if I sell my home before break-even? A: You cannot recoup the unused portion of points. They don’t transfer to the buyer. This is why buying points for a starter home you plan to sell within 5-7 years is usually financially unwise. Renters converting to buyers often skip points for this reason.
Final Thoughts: Empower Your Financial Future
Mortgage points are a powerful tool when used strategically. Our premium calculator eliminates the complexity and gives you clear, actionable data to make the smartest decision for your situation. The key is always the break-even analysis—know your timeline, understand your cash position, and let the numbers guide you.
Buying a home is likely the largest financial transaction of your life. Every dollar saved compounds over decades. Whether you choose to buy points or not, you’re now equipped with professional-grade tools to analyze your options like a seasoned financial advisor.
Try different scenarios, save your results, share them with your loan officer, and enter closing with confidence. Your future self will thank you for the thousands of dollars—and years of financial peace of mind—you’ve secured.
Ready to start saving? Input your numbers above and discover your personalized mortgage strategy in seconds.