Lenders let you pay discount points up front to lower your mortgage interest rate. This calculator works out the cost of the points, your reduced rate, the monthly payment saving, and the break-even point — so you can decide whether buying points is worth it.
How it works
One point costs 1% of the loan, and each point lowers the rate by a reduction you specify (about 0.25% is common). The tool computes the standard amortised monthly payment at both the base and reduced rates:
payment = principal × r ÷ (1 − (1 + r)⁻ⁿ)
where r is the monthly rate and n the number of payments. The monthly saving is the difference between the two payments, and break-even is the up-front cost divided by that saving.
Example
On a $300,000 loan over 30 years, buying 2 points (cost $6,000) to cut the rate from 6.0% to 5.5%:
- Base payment: $1,798.65/month
- New payment: $1,703.37/month
- Saving: $95.28/month
- Break-even: 6000 ÷ 95.28 ≈ 63 months (about 5 years 3 months)
| Item | Value |
|---|---|
| Points cost | $6,000 |
| Rate | 6.0% → 5.5% |
| Monthly saving | $95.28 |
| Break-even | ~63 months |
Buying points makes sense when you keep the loan well past break-even. Everything stays in your browser with no network requests.