UNITED STATES · MORTGAGE RATE BUYDOWN
Mortgage Discount Points Break-Even Calculator
Your lender may quote 6.50% with upfront points versus 7.00% without points. Compare two WRITTEN rate quotes instead of assuming a universal discount for each point.
Enter your figures
Figures are calculated in this browser; entered personal amounts are not required to be sent to our servers.
Calculation results
The point-to-rate relationship is NOT fixed. Use two written loan quotes with the same term and fees.
Estimate only. A bank, employer, tax office or lender may apply additional conditions. See the scope and source below.
When and how to use this calculator
1.25 points on a $300,000 loan costs $3,750 upfront. Compare the principal-and-interest amounts at the two quoted fixed rates over the same 360 months, then divide $3,750 by the monthly difference.
- Enter principal, term and the lender's no-points quote for a fixed-rate mortgage.
- Enter the rate paired with the same lender's points offer plus the number of points in the Loan Estimate. Do not invent a rate reduction per point.
- Check whether you expect to retain this mortgage long enough for monthly savings to offset the upfront cash outlay. Compare all non-points closing fees separately.
Understand your result
Same fixed loan balance and term for both offers; no lender closing fees other than points, tax deductions, escrow, life-of-loan rate changes or present-value evaluation. The break-even is payment based only.
Questions people ask
How much does one discount point cost?
One point costs exactly 1% of the mortgage principal before any separate fees. It does NOT correspond to one standard reduction in the loan interest rate.
Will points always save money?
Not if you refinance, pay off the mortgage or move before the illustrative payback period.
Are points included in APR?
Points generally affect APR disclosures; this model uses the quoted nominal contract rates and upfront point price, not a regulated APR formula.
Reference and calculation scope
Source material is provided for independent checking. Our calculator is not a government or bank service.