Mortgage Discount Points Break-Even Calculator
Enter your loan amount, interest rate, term, and the number of discount points you are considering. The calculator shows what your lender's rate buydown actually costs versus what it saves each month, how many months you must stay to break even, and — critically — whether you come out ahead over your planned hold period. Buying points can be worthwhile on a long-term hold; on a shorter one, you pay the upfront cost and move before the savings add up.
Loan details
Discount points
Break-even
60 months
You recover $3,000.00 in 60 months — then you save $50.11/mo from that point on.
Base payment
$1,995.91
at 7%
With points
$1,945.79
at 6.75%
Monthly saving
$50.11
Points cost
$3,000.00
1 pt × 1% of $300k
Net over 84-month hold
+1,209.51
You come out ahead — hold period exceeds break-even.
Points cost vs savings after 84 months
How it works
One discount point costs 1% of your loan amount and, by convention, typically reduces your interest rate by 0.25 percentage points — though the actual reduction varies by lender and market conditions. This calculator uses 0.25% per point as the default but lets you adjust it to match your lender's actual offer. The upfront cost is fixed; the benefit accumulates month by month as a lower P&I payment.
The break-even point is the month when your cumulative monthly savings finally cover what you paid upfront. Before that month, you are behind; after it, you are ahead. The only way to know whether buying points makes sense is to compare that break-even to how long you realistically plan to keep the loan. If you sell, refinance, or move before break-even, you leave money on the table — the savings never fully materialise.
The 'net over hold period' figure is the bottom line: it takes your planned hold period, multiplies it by your monthly saving, and subtracts the points cost. A positive result means you profit from buying points; a negative result means you would have been better off keeping the cash. The calculator flags the case where your hold period is shorter than break-even so you can see the loss clearly rather than being misled by the lower monthly payment alone.
Frequently asked questions
Are discount points tax-deductible?+
Discount points on a purchase mortgage are generally deductible in the year paid for primary residences under US federal tax law, subject to income limits and itemisation rules. This calculator does not model the tax benefit — for most borrowers in standard-deduction territory the tax angle is small, but if you itemise and are in a high bracket, an after-tax break-even will be shorter than what is shown here. Consult a tax adviser for your specific situation. This is not tax advice.
How does my lender's actual rate reduction per point affect the calculation?+
The 0.25% default is a rule of thumb derived from the common midpoint of lender offers; actual offers range roughly from 0.125% to 0.375% per point depending on loan type, term, credit profile, and market conditions. Before you run this calculation in earnest, get a written Loan Estimate from your lender showing both the no-points rate and the with-points rate, compute the difference, and enter that actual figure. A lender offering only 0.125% per point will require roughly twice as many months to break even compared with one offering 0.375%.
Should I buy points or put the money toward a larger down payment?+
This is a genuine trade-off the calculator cannot resolve on its own. A larger down payment reduces the principal you owe, which lowers every payment for the life of the loan and may eliminate PMI if you cross the 20% equity threshold — that can be worth considerably more per month than a rate buydown. Points, by contrast, reduce the rate but not the balance. As a rough guide: if you are close to the 20% equity line, the down payment option usually wins. If you are comfortably above it, run both scenarios and compare the lifetime savings.