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Use the same loan amount and term, then enter the rates and point cost your lender offers.
Discount Points Calculator
Mortgage rate options. Compare the cost of buying a lower interest rate with the monthly payment savings. Find your break-even point and see how the numbers look over the time you expect to keep your mortgage.
Your discount points comparison
Estimated break-even period 62 months
5 years, 2 months | Loan option | Interest rate | Monthly payment |
|---|---|---|
| Without points | 6.50% | $2,844.31 |
| With points | 6.25% | $2,770.73 |
Upfront cost of points $4,500.00
1 point × $450,000.00 ÷ 100
Monthly payment savings $73.58
Principal and interest only
-$85.28
Net payment savings after 5 years, after subtracting the cost of points.
At your 5-year timeline, estimated payment savings have not yet recovered the cost of points. Consider that timing when comparing your options.
Payment savings after the cost of points
Break-even = upfront point cost ÷ monthly payment savings, rounded up to the next month. This is a simple cash flow comparison. It excludes loan balance differences, the time value of money, tax effects, other closing costs, taxes, insurance, mortgage insurance, and HOA dues.
A lower rate today. A decision that depends on time.
Paying points trades more cash at closing for a smaller monthly payment. The longer you keep the same mortgage, the more time those payment savings have to offset the upfront cost.
Look beyond the payment
Keep enough cash for closing, moving, and reserves. A lower payment comes with an upfront expense.
Consider your timeline
Use your expected time with the mortgage, including a possible sale or refinance, when reviewing the break-even result.
Compare discount points with a temporary buydown
See how a 2-1 buydown changes your first two years of payments and estimate the funds needed at closing.
Understanding your options
Discount points questions, answered
What are mortgage discount points?
Discount points are an upfront fee paid at closing in exchange for a lower mortgage interest rate. One point equals 1% of the loan amount, so one point on a $450,000 mortgage costs $4,500.
How much does one point lower my interest rate?
There is no fixed reduction per point. Pricing depends on the lender, loan program, market, and borrower. Enter the actual rate and points from your loan quote rather than assuming a standard reduction.
How is the break-even period calculated?
Divide the cost of the points by the monthly principal and interest savings. For example, $4,500 in points and $73 in monthly savings would take about 62 months to recover through lower payments. The calculator uses unrounded payments and rounds the result up to a whole month.
Are discount points worth it if I plan to refinance?
Compare your expected time with the loan against the break-even period. Selling or refinancing before that point can mean the payment savings have not recovered the upfront cost. Future rates and refinancing eligibility are uncertain.
How are discount points different from a 2-1 buydown?
Discount points lower the mortgage note rate. A temporary 2-1 buydown uses funds set aside at closing to subsidize the first two years of payments while the note rate remains unchanged. Compare upfront funding, payment schedules, and how long you expect to keep the loan.
Does the calculator include all closing costs?
No. It calculates the cost of the discount points you enter. Origination fees, title and escrow charges, prepaid items, taxes, and insurance are separate. Compare complete Loan Estimates before choosing between offers.
Learn more from the CFPB guide to discount points and lender credits.
Estimates are for educational purposes and do not constitute an offer or approval of credit. Results assume a fixed-rate loan, scheduled monthly payments, and points paid upfront rather than financed. Contact Loan City Mortgage for personalized pricing. 916-726-7777