Mortgage Points Break Even Calculator
One discount point costs one percent of the loan amount and buys down your interest rate. The break-even point is the month when cumulative interest savings equal that upfront cost. If you sell or refinance before reaching it, the points were wasted money. Enter your loan details above to see whether buying points makes financial sense for your timeline.
The buydown offer
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$0 up front to save $0 a month
- Payment without points
- $0.00
- Payment with points
- $0.00
- Rate after buydown
- 0%
- Saved by then
- $0
- Net after the points cost
- $0
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The Math Behind Discount Points
On a $300,000 loan, one point costs $3,000. If that point reduces your monthly payment by approximately $45, the break-even arrives at month 67 — roughly five and a half years. Every month after that, the lower rate is saving you money you would not have kept otherwise.
Points are tax-deductible in the year of purchase for a primary residence, which can shorten the effective break-even for borrowers who itemize. On a refinance, however, the deduction must be spread over the loan term unless the old loan is paid off, a detail many borrowers overlook.
Multiple points amplify both the cost and the benefit. Two points on the same $300,000 loan cost $6,000, and the larger rate reduction may cut the payment by approximately $90 per month, keeping the break-even near the same 67 months. The tool lets you compare one, two, or fractional points to find the sweet spot for your situation.
When Points Work Against You
The single biggest risk is a short holding period. If career, family, or market plans could move you within five years, paying thousands upfront for a rate reduction you will not use long enough is a losing trade. The calculator shows the crossover month so you can judge that risk against your own timeline.
A related hazard is the refi trap. Even borrowers who plan to stay put sometimes refinance again when rates drop further, resetting the clock and forfeiting the unrecovered cost of the original points. Ask yourself whether you would bypass a meaningfully lower rate simply to protect an earlier point purchase — most people would not.
Before committing, compare points against a larger down payment. Extra cash toward the down payment reduces the loan amount, may eliminate PMI, and delivers guaranteed savings regardless of how long you stay. The break-even calculator here and that comparison tool together give you a full picture of where each dollar works hardest.
Rate reductions per point vary by lender and market conditions. The figures here rely on the rate inputs you provide, not on any assumed market rate.