Mortgage Points Calculator

Each point costs 1% of your loan to shave the rate. Whether that trade pays depends entirely on one number — the break-even month. Find yours before you hand over the cash.

1 · Afford 2 · Payment 3 · Schedule 4 · Pay off early 5 · Closing costs 6 · PMI 7 · Refinance 8 · Rates guide

The break-even rule

Break-even = cost of points ÷ monthly savings. On a $350,000 loan, 2 points cost $7,000 and cut a 6.75% rate to 6.25%, saving about $180 a month. Break-even: roughly 39 months. Keep the loan longer than that and the points profit you — here, over $55,000 of lifetime interest saved net of the cost. Sell or refinance in year three and you have bought an expensive souvenir.

What most buyers get wrong about points

The '0.25% per point' rule is a starting guess. Actual pricing varies daily and by lender; sometimes a point buys 0.125%, sometimes 0.35%. Always price with real quotes.
Points vs down payment: if cash is tight, the same $7,000 as extra down payment also lowers the payment and can help cross the PMI threshold — often the better use.
Points vs investing: the 'return' on points is your rate, guaranteed and tax-effected; compare it honestly with alternatives, including simply keeping liquidity.
Negative points exist: accepting a higher rate earns lender credits that pay your closing costs — the right trade if your horizon is short. See the closing cost calculator.

How to decide in five minutes

Get same-day quotes at 0, 1 and 2 points from one lender. Enter each into this calculator. If your realistic stay is at least twice the break-even period, points are usually a good buy; if your horizon is fuzzy or short, keep the cash. Then confirm the winning offer against competitors in the comparison calculator and see how the fees change the APR. More on rate pricing in the mortgage rates guide.

Your next steps

Head to head

Compare full offers

Points plus fees plus rate — the total cost ranking.

One number

APR calculator

See points and fees folded into the APR.

Learn

Rates explained

How lenders price rates, points and credits.

Related calculators

Mortgage Payment Calculator

Your true monthly payment with taxes, insurance & PMI.

Mortgage Comparison Calculator

Two offers, one winner — on total cost.

Mortgage APR Calculator

Fees and points converted into a true APR.

Frequently asked questions

What is one mortgage point?

One point equals 1% of the loan amount — $3,500 on a $350,000 loan — paid at closing in exchange for a lower interest rate, typically about 0.25% off, though the exact trade varies by lender and day.

Are mortgage points tax deductible?

Points paid on a loan to buy or build your main home are generally deductible in the year paid if you itemize and meet IRS conditions. Points on a refinance are usually deducted over the loan's life. Confirm with a tax professional.

How long until points pay off?

Cost ÷ monthly savings. $7,000 ÷ $180 ≈ 39 months in our example. If you will keep the loan less than the break-even period, decline the points.

Should I buy points or make a bigger down payment?

If extra down payment gets you to 20% (ending PMI) or a better pricing tier, that usually dominates. Otherwise compare: points return your mortgage rate on the money; a bigger down payment also does — but points amplify via the rate cut on the whole remaining balance.

What are lender credits (negative points)?

The mirror image: you accept a rate above par and the lender credits cash toward closing costs. It raises monthly cost but preserves your cash — often smart for short horizons or cash-tight buyers.

Sources & further reading

Official sources for program rules and consumer rights. Zorvex is not affiliated with these agencies; figures here are estimates for education.