Mortgage Points Calculator
Find out whether paying points for a lower mortgage rate pays off, and how long it takes.
Quick answer
A mortgage point costs 1% of the loan and buys a lower rate. Break-even months = cost of points / monthly payment saving. You gain only if you keep the loan longer than that.
Mortgage Points Calculator
1 point = 1% of the loan.
Use the reduction from your lender's quote.
Cost of Points
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Reduced Rate
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Payment at Base Rate
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Payment at Reduced Rate
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Monthly Saving
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Break-even
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Net Saving Over Holding Period
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Net Saving by Holding Period
| Year | Payments saved (₹) | Balance difference (₹) | Cost of points (₹) | Net saving (₹) |
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Assumptions & method
- Cost of points = loan × points ÷ 100, paid in cash at closing and not added to the loan.
- Reduced rate = base rate − points × reduction per point. It must not fall below 0%.
- Payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r = annual rate ÷ 12 and n = years × 12.
- Break-even months = cost of points ÷ monthly payment saving. It is shown only when the payment actually falls.
- Net saving after h years = payments saved + (balance at base rate − balance at reduced rate after h years) − cost of points. If h exceeds the term, the full term is used.
- Not included: tax treatment of points, the return you could earn on the cash instead, other fees, or a change of rate during the loan.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
Buying down your rate with points
Paying points means paying more at closing to get a lower interest rate for the life of the loan. Each point costs 1% of the loan, and the lender cuts the rate by some fraction of a percentage point in return. The lower rate shrinks your monthly payment, and the question is whether the savings add up to more than the fee before you sell or refinance. This calculator compares the loan at the base rate with the bought-down loan, finds the break-even month, and shows the net saving for the number of years you expect to keep the mortgage.