Are mortgage points tax-deductible?

Often yes, for points paid on a loan to purchase your main home, subject to IRS rules — this calculator doesn't model the tax benefit, so the real payback may be faster than shown.

What's the difference between discount points and origination points?

Discount points buy down your interest rate. Origination points are a lender fee for processing the loan and don't change your rate at all.

Does paying points make sense on a refinance?

The same break-even logic applies, but refinances often come with a shorter expected hold period than a purchase, so run your own realistic timeline.

Can I finance points into the loan instead of paying cash?

Some lenders allow this, but it increases your loan balance and total interest — this calculator assumes points are paid upfront in cash.

Do points always make sense for a 30-year loan?

Not automatically — it still depends on how long you'll actually hold the loan, not just its stated term.

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Finance

Mortgage Points Calculator

Break-even point for buying down your rate with discount points, vs. your planned hold length.

🔒 Runs entirely in your browser — nothing here is ever uploaded

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Last reviewed 2026-08-30

About the Mortgage Points Calculator

Finds the break-even point for paying upfront discount points to buy down a mortgage rate — the point at which monthly savings from the lower rate exceed what you paid for the points — and shows whether that break-even happens before or after how long you actually plan to keep the loan.

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How to use it

Enter the loan amount and the rate you'd get with no points.
Enter how many discount points you're considering (1 point = 1% of the loan amount) and the rate reduction each point buys.
Enter the loan term and how long you actually plan to keep this loan.
Read the break-even point, and whether it falls before or after your planned hold length.

Formula

Discounted rate = no-points rate − (points purchased × rate reduction per point). Points cost = loan amount × (points purchased ÷ 100). Monthly payment (either rate) = P × r / (1 − (1+r)^−n). Monthly savings = payment at no-points rate − payment at discounted rate. Break-even (months) = points cost ÷ monthly savings.

Worked example

A $400,000 loan at 6.75% with no points vs. 2 points (6.25% after a 0.25%/point reduction): the 2 points cost $8,000 upfront and save about $67/month, breaking even around year 10 — worth it only if you plan to keep the loan at least that long.

Interpreting your result

Each point's rate reduction is set by the lender, not a fixed law — 0.25% per point is a commonly cited average, but it varies by lender, loan program, and rate environment. This tool doesn't model points as tax-deductible or shop real lender quotes. If you'll sell or refinance before the break-even point, buying points is usually not worth it.

Recommendations

• If you might sell or refinance within 5-7 years, points rarely pay off — check the break-even month against your realistic timeline.
• Points pricing varies by lender and even by the day (tied to bond markets) — get points pricing on the same rate lock, same day, from the same lender you're comparing against.
• Some 'points' quoted by a lender are origination points (a fee, no rate impact) rather than discount points — confirm which type you're being quoted before running the numbers.

Frequently asked questions

No — it's a commonly cited average, not a fixed rule. Lenders price discount points based on current market conditions, loan program, and loan size.