Mortgage Points Calculator
Decide whether buying discount points is worthwhile by comparing the up-front cost against the monthly saving and the month you break even.
Mortgage Points Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: One discount point costs 1% of the loan and typically cuts the rate by about 0.25%. Two points on a $336,000 loan cost $6,720.00 and drop 6.5% to 6.0%, saving $109.26 monthly — but break-even takes 61.5 months, so points only pay if you stay past five years.
Formula
Break-even ignores the time value of money, which biases the result slightly in favour of buying points. The horizon test is the decisive one.
Worked Example
- Cost. 2 points on $336,000 = $6,720.00 paid at closing.
- Payments. $2,123.75 at 6.5% against $2,014.49 at 6.0%.
- Monthly saving. $109.26.
- Break-even. $6,720.00 ÷ $109.26 = 61.5 months, or 5y 2m.
- Test the horizon. Over 7 years you are ahead $2,457.74; over 5 years you are down $164.47.
Analyst note. The five-year case is the one that catches people out. A break-even of 61.5 months means a borrower who sells or refinances at the five-year mark loses money on the points despite the headline lifetime saving of $32,613.17. Median tenure is shorter than most buyers assume when they commit the cash.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Deciding at the rate-lock stage
Lenders present points as an obvious saving because they quote the lifetime figure. The break-even against your actual horizon is the only number that matters, and the Mortgage APR Calculator shows the same trade-off expressed as a single rate.
Comparing points against a larger deposit
The same cash could reduce the loan instead. A larger deposit may also remove PMI, which frequently beats a rate discount — quantify it with the PMI Calculator.
Evaluating negative points or lender credits
Enter a negative point value to model a lender credit that raises the rate in exchange for cash at closing. That suits short horizons, and the Closing Cost Calculator shows the cash effect.
Methodology & Editorial Standards
Both payments are amortised on the same balance and term, differing only in rate, so the comparison isolates the effect of the discount. Break-even is the simple undiscounted ratio of cost to monthly saving, which is the industry convention; a present-value break-even would be slightly longer, so this method mildly favours buying points. The horizon calculation multiplies the saving by the months you expect to hold the loan and subtracts the cost, which is the decisive test. Note that the comparison assumes the loan runs to term at the discounted rate; any refinance resets the arithmetic and forfeits the unrecovered portion of the points. Tax deductibility of points is not modelled. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Mortgage Points Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is a mortgage point?
One point costs 1% of the loan amount and buys a permanently lower interest rate, typically by around 0.25%. On a $336,000 loan one point is $3,360.00, paid at closing.
How do I know if buying points is worth it?
Compare break-even against how long you will keep the loan. Here break-even is 61.5 months, so staying seven years leaves you $2,457.74 ahead while leaving at five years loses $164.47.
How much does one point lower the rate?
Roughly 0.25%, though it varies by lender and market conditions. This example assumes 0.25% per point, which the per-point output confirms from the rates you enter.
Are mortgage points tax deductible?
Points on a home purchase are generally deductible in the year paid if you itemise, while points on a refinance must usually be amortised over the loan term. Rules change, so verify for the current year.
What are negative points?
A lender credit: you accept a higher rate and the lender pays some of your closing costs. Enter a negative point value to model it. This suits borrowers with short horizons or tight cash.
Does refinancing waste the points I bought?
Yes, any unrecovered portion is lost. Buying points then refinancing after three years means paying $6,720.00 to recover only about $3,933 of saving — a substantial and avoidable loss.
Should I buy points or make a bigger deposit?
If the larger deposit eliminates PMI, it usually wins, since removing a $182.88 monthly premium beats a $109.26 rate saving for the same cash. Otherwise compare both break-evens directly.
Can I buy fractional points?
Yes, lenders routinely price in eighths. The step on this calculator is 0.125 points for that reason, and the arithmetic is linear across fractions.
Do points affect APR?
Yes, significantly. APR incorporates points and fees, which is precisely why a loan with points shows a lower APR relative to its note rate than one without. It is the fairest single-number comparison.
Is there a limit to how many points I can buy?
Lenders typically cap it around three or four, and the rate reduction per point often diminishes beyond the first two. Check the actual quoted rate at each level rather than extrapolating linearly.
Why is break-even longer than the rule of thumb?
Because the common rule ignores that the saving is on a payment which is mostly interest early on. At 6.5% on a thirty-year loan the honest figure is over five years, not the three often quoted.
Do points make sense on a short-term loan?
Rarely. A fifteen-year loan already carries a lower rate and a shorter window to recover the cost. The shorter the loan or your tenure, the weaker the case for paying points.
Is this mortgage points calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.
Which currency does it use?
Amounts display in US$ accounting format, but the underlying mathematics is currency-agnostic. The result is identical in any currency, so simply read the figures in your own.
Why does a result show an em-dash?
An em-dash indicates the calculation is not defined for the inputs given — typically a division by zero or a value outside the valid domain. We show a dash rather than a misleading number.
How do I report an error?
Email apexconverter.praxiscalc@gmail.com with the tool URL, your exact inputs, the output received and the output you expected. Verified mathematical errors are patched within 72 hours.