Mortgage Discount Points Calculator
Points are prepaid interest. They only pay off if the loan lasts long enough to collect.
What This Calculator Does
Sets discount points against the rate reduction they purchase: the cost at closing, the reduction in the monthly payment, and the number of months of that saving needed to recover the outlay. Beyond that month the points are profit; before it, a loss.
Who Is This For
Buyers choosing between a lower rate and lower closing costs, refinancers weighing points against a short payback horizon, and anyone comparing lender quotes where one is priced with points and the other is not.
How It Works
Provide the loan amount, the rate quoted without points, the number of points offered with the rate reduction each buys, and how long you expect to keep the loan. Out come the cost, the monthly saving, and the break-even month.
Frequently Asked Questions
What exactly is a discount point?
One discount point costs 1% of the loan amount, is paid at closing, and buys a lower rate for the life of the loan. Typical pricing takes roughly 0.125-0.25% off the rate per point, though the exact trade varies by lender and shifts day to day.
How is the break-even month calculated?
Divide the cost of the points by the monthly payment they save. The answer is the number of months the loan must survive for you to get the money back. Hold longer and you are ahead; sell or refinance sooner and you paid for a benefit never collected.
Are points worth buying?
Only where your realistic horizon comfortably clears the break-even month. Buyers who expect to move, refinance, or pay down early are usually better served putting the same cash into the down payment or keeping it in reserve.
Is a discount point the same as an origination fee?
They are not, although both are quoted as a percentage of the loan and both appear on the same page of the estimate. Discount points buy the rate down. Origination charges pay the lender for making the loan and buy you nothing. Read the labels closely when comparing quotes.
Are points sensible in the current rate environment?
With benchmark 30-year rates near 6.6-6.7% in mid-2026, many borrowers expect to refinance if rates ease, which shortens the effective horizon and argues against paying points. Where you genuinely intend to hold long term, the arithmetic can still favour them. Use your own horizon rather than an assumption.
Can points be deducted?
Points paid to lower the rate on the purchase of a primary residence are often deductible, sometimes in the year paid and sometimes spread across the loan term, while points on a refinance are usually treated differently. That is a question for your tax advisor, not for a calculator.