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Mortgage Points Break-Even Calculator: See When Points Pay Off

Decision rule: Break-even months equal the upfront cost of points divided by the monthly payment savings. Points may not pay back if you sell or refinance before that month.

Compare upfront points with monthly savings and expected holding period.

Put the upfront cost on the same timeline as the monthly savings

The useful question is not whether points lower a rate. It is whether you keep the mortgage long enough to earn back the cash.

Quote without points
Quote with points

Use two quotes issued at the same time for the same loan, lock period and lender.

Your holding-period verdict

Cost now or savings later?

The result will place both on one timeline.

Point cost ÷ monthly savings = months to recover the cost

Point cost equals loan amount multiplied by the points percentage. Net savings at your holding period equals monthly savings multiplied by months held, minus point cost.

What one point means

One point is 1% of the loan amount. It does not promise a standard rate reduction. The lender's same-day pricing determines how much the payment changes.

A $4,000 decision, not a percentage puzzle

One point on a $400,000 loan costs $4,000. If the payment falls by $85, the simple break-even is about 47 months before opportunity cost or tax effects.

Check the assumptions before choosing: review the full mortgage-points decision and test each payment in the mortgage calculator.

Use this order at the quote desk

  • Get same-day quotes with and without points.
  • Enter the same loan amount for both choices.
  • Use principal-and-interest payments, not totals with different escrow assumptions.
  • Compare break-even with the month you expect to sell, refinance or pay off.

Check the calculator against the disclosure

A useful estimate still depends on accurate inputs. These official resources explain the terms behind this tool.

Before you rely on the number

Is one point always the same rate reduction?

No. One point always costs 1% of the loan amount, but the rate reduction depends on market pricing and the lender.

Can lender credits be compared the same way?

A lender credit works in the opposite direction: it can reduce upfront cost in exchange for a higher rate. Compare cost over your expected holding period.

This calculator is educational. It is not a quote, approval decision or individualized financial advice.