📉 Mortgage Points Calculator
Calculate if buying mortgage points is worth it. Compare the breakeven point, monthly savings, and total interest savings. See how discount points can lower your interest rate and reduce your monthly payment.
What Is a Mortgage Points Calculator?
A mortgage points calculator helps you determine whether buying discount points is a smart financial decision. Mortgage points (also called discount points) are prepaid interest that you pay at closing to lower your interest rate for the life of the loan.
This calculator includes:
- Points Cost — each point costs 1% of your loan amount (typically).
- Rate Reduction — each point typically lowers your rate by about 0.25%.
- Breakeven Point — the number of months it takes for your monthly savings to cover the points cost.
- Total Interest Savings — how much interest you save over the life of the loan.
- Net Savings — total interest savings minus the cost of the points.
How Does the Mortgage Points Calculator Work?
The calculator performs the following steps:
- Calculates the monthly payment for both scenarios (with and without points) using the standard amortization formula.
- Calculates the points cost — loan amount × points × cost per point percentage.
- Determines the monthly savings — payment without points − payment with points.
- Calculates the breakeven point — points cost ÷ monthly savings.
- Computes total interest for both scenarios over the full loan term.
- Generates a full amortization schedule — showing every payment over the life of the loan.
Why Use This Mortgage Points Calculator?
- Breakeven Analysis: Know exactly when you'll start saving money.
- Side‑by‑Side Comparison: See the difference in monthly payments and total interest.
- Tax Deductible: Points are typically tax‑deductible in the year they're paid.
- Visual Chart: Instantly see the interest comparison over the life of the loan.
- Free & Private: No registration, no data storage — all calculations are done in your browser.
❓ Mortgage Points Calculator FAQ
What are mortgage points?
Mortgage points (discount points) are prepaid interest that you pay at closing to lower your interest rate. One point costs 1% of your loan amount and typically lowers your rate by about 0.25%.
What is the breakeven point?
The breakeven point is the number of months it takes for your monthly savings from a lower rate to cover the cost of the points. If you plan to stay in the home longer than the breakeven point, buying points makes financial sense.
Are mortgage points tax deductible in 2026?
Yes. Mortgage points are generally tax deductible in the year they are paid, as long as the loan is secured by your primary residence. The points are treated as prepaid interest.
What is the typical rate reduction per point?
Each point typically reduces your interest rate by 0.25%, though this can vary by lender. Some lenders may offer 0.20% to 0.30% reduction per point depending on market conditions.
How many points can I buy?
Most lenders allow you to buy 1 to 3 points, though some may allow up to 5 points. Buying more than 3 points is rarely beneficial due to diminishing returns and IRS limitations.
Who pays for points?
Points are typically paid by the buyer. However, seller concessions can cover up to 3% of the loan amount for points and closing costs, depending on the loan type.
What is the difference between discount points and origination points?
Discount points are prepaid interest to lower your rate. Origination points are fees charged by the lender for processing the loan — they do not lower your rate and are not tax deductible.
How accurate is this calculator?
This calculator provides accurate estimates based on standard amortization formulas and 2026 mortgage rates. Actual rate reductions vary by lender. Use this as a planning tool and consult a mortgage professional for precise quotes.
Is this calculator free to use?
Yes, this calculator is completely free to use. No registration or personal data storage is required. All calculations are performed in your browser.
What are the 2026 mortgage rates?
As of September 2026, the average 30‑year fixed rate is 6.91% and the 15‑year fixed rate is 6.13%. Buying 1 point typically reduces these rates by about 0.25%.