Mortgage Points Break-Even Calculator
Use two actual loan quotes to see whether a lower rate saves enough to cover its upfront points before you sell or refinance.
Free to use. No account needed.
Example shown. Adjust the assumptions
Net benefit after 5 years
$1,711
Interest savings cover the points cost over this holding period. Includes the loan balance difference.
- Payment-savings break-even
- 30 months
- Payment savings over your hold
- $2,289
- Additional equity from loan paydown
- $547
- Less upfront points
- -$1,125
Before tax and opportunity cost. Net benefit includes the loan balance difference; payment break-even does not.
Savings by holding period
| Year | Payment savings | Net benefit |
|---|---|---|
| 1 | $458 | -$561 |
| 2 | $916 | $4 |
| 3 | $1,373 | $572 |
| 4 | $1,831 | $1,141 |
| 5 | $2,289 | $1,711 |
Points are included once in the lower-rate option’s closing costs.
Save and compare with Plus. Add taxes, sale planning and scenarios.
Using the result
How long you keep the loan determines whether the lower rate is worth the upfront cost.
Payment break-even and the loan balance
One discount point costs 1% of the loan amount. The calculator compares the same loan amount and term at your original rate and the quoted lower rate. Points are paid upfront and are added once to the lower-rate option’s closing costs.
Payment break-even = upfront points ÷ monthly payment savings
That familiar break-even calculation tracks cash payments only. If you sell or refinance, a difference in the remaining loan balance also affects the result. The headline therefore uses interest saved through your holding date minus points paid.
Net benefit = payment savings + additional principal repaid − points cost
Payments stop when the loan is paid off. The model excludes tax deductions, discounting, opportunity cost and future refinancing fees. Use the actual rate difference in a lender’s quote; a point does not buy a universal rate reduction.
For loan terms and costs, check your lender’s written quote. The CFPB explains how points and lender credits work, including why their value depends on how long you keep the loan.
Example with these assumptions
For the example $112,500 loan, one point costs $1,125. Reducing the rate from 7.5% to 7% saves $38 a month. Over five years, payment savings plus the lower remaining balance produce a $1,711 net benefit after the points cost.
Before income tax. Verify inputs and estimates before acting. Terms & privacy.
Common questions
Why is net benefit different from payment savings?
Part of each mortgage payment repays principal. Two rates produce different repayment schedules and remaining balances. Net benefit includes both the cumulative payment difference and that balance difference, then subtracts the points cost.
What if I refinance sooner than expected?
Change the time before sale or refinance to match that shorter hold. You may not recover the points cost. This tool assumes you pay off the remaining balance at that date and does not estimate the cost of the replacement loan.
Are discount points tax deductible?
Their treatment depends on the property, purpose of the loan and applicable tax rules. This comparison is before income tax and makes no automatic deduction assumption. Ask a tax professional about your situation.
What carries into the full property analyzer?
Your selected price, financing, rent, costs, reserves and repairs. The new analysis starts with 3% annual rent and fixed-cost growth, both editable. Growth does not affect the first-year results here.