Mortgage Discount Points Calculator
Buying down the rate only pays off if you keep the loan long enough.
What This Calculator Does
Prices discount points against the rate reduction they buy, showing the upfront cost, the resulting monthly savings, and the number of months required to recover that cost.
Who Is This For
Buyers deciding between a lower rate and lower upfront costs, refinancers weighing points against their expected holding period, and anyone comparing lender quotes priced differently.
How It Works
Enter the loan amount, the rate without points, the number of points offered, the rate reduction each provides, and the loan term to see the cost, monthly savings, and break-even month.
Frequently Asked Questions
What is a mortgage discount point?
A discount point is an upfront fee, commonly quoted as a percentage of the loan amount, paid at closing to reduce the interest rate for the life of the loan; the exact rate reduction per point varies by lender and market conditions.
How do I find the break-even month for points?
Divide the cost of the points by the resulting monthly savings; the result is the number of months needed to recover the upfront cost through lower payments.
Should I buy points on my loan?
Buying points tends to make more sense the longer you expect to hold the loan past the break-even month; buyers who expect to move or refinance sooner are often better served applying the same funds elsewhere.
Are discount points the same as origination fees?
No — discount points are paid specifically to reduce the interest rate, while origination fees compensate the lender for making the loan without lowering the rate; compare the two separately when reviewing a loan estimate.