Cost of Points
$6,000.00
Discount Points Calculator
Find the breakeven point for buying mortgage discount points.
Breakeven Period
61.5 months
New Rate
6.00%
Monthly Savings
$97.55
Original Payment
$1,896.20
How to use the Discount Points Calculator
The Discount Points Calculator is free and runs entirely in your browser — no sign-up, and nothing you enter leaves your device. It opens pre-filled with a realistic example, so you can see how it works before replacing any figure with your own; the results update as you type. Press Calculate to refresh the result panel, or Reset to return to the example.
The inputs it asks for:
- Loan Amount — a dollar amount.
- Rate Without Points — a percentage (enter 6 for 6%).
- Rate Reduction per Point — a percentage (enter 6 for 6%).
- Points Purchased — a number.
- Loan Term (Years) — a number.
The formula
Each point costs 1% of the loan and buys a small rate cut. It prices the payment with and without the points, then divides what the points cost by the monthly payment they save to find how long you must keep the loan to break even:
Breakeven months = Cost of points ÷ Monthly payment saved- Cost of points
- loan amount × points × 1%
- Monthly payment saved
- payment at the base rate − payment at the reduced rate
Points pay off only if you keep the mortgage past the breakeven point. Sell or refinance before then and you've spent more on points than you got back. The cost is also usually paid in cash at closing.
Worked example
Using the example values — Loan Amount $300,000.00, Rate Without Points 6.5%, Rate Reduction per Point 0.25%, Points Purchased 2, Loan Term (Years) 30 — the Discount Points Calculator returns a Breakeven Period of 61.5 months. It also reports Cost of Points ($6,000.00), New Rate (6.00%), Monthly Savings ($97.55).
Prefer your own numbers? Change any field above and this recomputes instantly.
Key terms
- Discount point
- An upfront fee equal to 1% of the loan that lowers the interest rate.
- Breakeven point
- The month at which cumulative payment savings equal the points' cost.
- Buying down the rate
- Paying points to secure a lower rate for the life of the loan.
Frequently asked questions
When are points worth it?
When you'll hold the loan well beyond the breakeven month. The longer you keep the mortgage past that point, the more the points pay off.
Are points tax-deductible?
Points on a home purchase are often deductible as prepaid interest, though rules vary. This calculator ignores any tax effect.
Is one point always the same rate cut?
No — the reduction per point varies by lender and market. Enter the actual reduction your lender quotes.