Rate-buydown tool
Mortgage Points Calculator
A mortgage point is a fee — 1% of the loan amount — paid at closing in exchange for a lower interest rate. One point costs $4,000 on a $400,000 loan, and in exchange the lender typically moves the rate down roughly an eighth to a quarter of a percent. Whether that trade pays depends on one number most points explanations skip: the break-even — how many months of lower payments it takes to recover the upfront cost.
Context rate: the Freddie Mac PMMS 30-yr average was 7.03% the week of September 24, 2026. On the worked example at that rate, one illustrative point at a 0.25% rate drop costs $4,000, saves $66.90/month, and breaks even at month 60 — exactly year 5. Stay shorter than that and the point cost more than it returned; stay longer and it keeps paying every month after.
Mortgage points calculator
One point costs 1% of the loan and buys the rate down. The answer is the break-even: how many months of lower payments recover the upfront cost.
Buying 1 point ($4,000)
Break-even: 4 yr 12 mo
$2,602.37/mo at 6.78% — $66.90/mo saved. Past 4 yr 12 mo, the point keeps paying every month.
Rate with this choice
6.78%
Monthly P&I
$2,602.37
Monthly saving vs baseline
$66.90
The points ladder
The break-even barely moves as you buy more points — the second point costs the same and buys a similar cut. The decision is less “how many points” and more how certain you are about keeping the loan past the break-even.
| Points | Upfront cost / credit | Rate | Monthly P&I | vs baseline | Break-even |
|---|---|---|---|---|---|
| -1 | $4,000 | 7.28% | $2,736.85 | +$67.58/mo | 4 yr 11 mo |
| None | — | 7.03% | $2,669.27 | — | — |
| +1 | $4,000 | 6.78% | $2,602.37 | −$66.90/mo | 4 yr 12 mo |
| +2 | $8,000 | 6.53% | $2,536.17 | −$133.10/mo | 5 yr |
| +3 | $12,000 | 6.28% | $2,470.68 | −$198.60/mo | 5 yr |
Spreads are illustrative — actual point pricing varies by lender, market, and loan characteristics. The Qualified-Mortgage rule caps points and fees at 3% of the loan on loans of $100,000+ (CFPB). “Origination points” quoted by a lender are a fee, not a rate purchase — the Loan Estimate separates the two.
What ends the break-even early
The break-even assumes you keep the loan past it. Three things end a mortgage before its term: selling the home (the most common way a mortgage ends), refinancing (a rate-drop refi restarts the clock — points paid on the old loan don't carry over), and prepaying (extra payments shorten the window in which the monthly savings accrue). The pattern is the same shape as any upfront-cost-vs-monthly-benefit trade: the answer is the crossover, and the crossover only pays if you're still there when it passes.
Every figure here is formula output from cited defaults (rate, deductions, taxes shown in the assumptions). Planning estimate — not tax or financial advice.
Pair it with the mortgage payment calculator (the payment side) and the refinance calculator (the same decision shape later, on the balance that remains). Sources: Freddie Mac PMMS (freddiemac.com/pmms); CFPB points-and-fees cap. This is an estimate, not lending or tax advice.
The break-even math (worked)
The break-even is total points cost ÷ monthly payment savings. Both halves are computed — the point cost is exact ($4,000 per point on $400,000), and the payment savings use illustrative rate spreads of 0.25% per point, labeled as such:
| Buy… | Rate (illustrative) | Payment | Monthly saving | Break-even |
|---|---|---|---|---|
| 0 points | 7.03% (PMMS) | $2,669.27 | — | — |
| 1 point ($4,000) | 6.78% | $2,602.37 | $66.90 | 59.8 months (~year 5) |
| 2 points ($8,000) | 6.53% | $2,536.17 | $133.10 | 60.1 months (~year 5) |
The break-even barely moves as you buy more points. One point or two, the crossover lands near year 5 on this spread — because the second point costs the same and buys a similar rate cut. The decision is therefore less “how many points” and more how certain you are about staying past year 5.
The spread is illustrative; the rule is not. Lenders price points differently by market and day — some offer a quarter-point per point, some less on low-down-payment loans. The break-even rule (cost ÷ monthly saving) is constant; the inputs come from your actual Loan Estimate.
What a point is (and what it isn't)
Discount points — prepaid interest. 1 point = 1% of the loan amount, paid at closing to buy the rate down. They're optional, quoted in halves and quarters, and their entire value is the rate reduction they purchase.
Origination points — a fee, not a purchase. Lenders sometimes quote origination in “points” too. That's a cost with no rate attached — different thing, same word. The Loan Estimate separates them; so should any comparison.
What points are not: they are not a closing cost in the ordinary sense (the closing-cost calculator treats them as a separate input, and so does this page — conflating prepaid interest with transaction costs distorts both); they are not refundable; and they are capped — the Qualified-Mortgage rule limits points and fees to 3% of the loan on loans of $100,000+ (CFPB).
Negative points: the lender credit
Points run both directions. A negative point (lender credit) raises the rate — roughly 0.25% per point on the illustrative spread — and hands you cash at closing: on the example, a $4,000 credit at 7.28% raises the payment to $2,736.85 (+$67.58/mo) and the credit recovers in about 59 months. The credit is closing-cost relief — genuinely useful when cash at closing is the constraint. The trade is the mirror of buying points: past the ~59-month mark, the higher rate costs more than the credit returned. Cash now versus payment later, priced in months.
The factor that decides it: how long you'll keep the loan
The break-even table has an implicit question mark: it assumes you keep the loan past year 5. Three things end a mortgage earlier than its term:
- Selling the home — the most common way a mortgage ends.
- Refinancing — a rate-drop refinance restarts the clock; points paid on the old loan don't carry over. On the refinance calculator's own defaults ($300,000 balance, 25 years left, 7.03% → 6.5%, 30-yr term, $4,000 closing), the payment drops $2,126.08 → $1,896.20 ($229.88/mo saved) — a 17.4-month payback on the closing costs. Buying points is the same decision shape at purchase time; refinancing is the same shape later, on the balance that remains.
- Paying off early — extra payments (biweekly or lump-sum) shorten the window in which the points' monthly savings accrue; the payoff calculator and amortization schedule show both schedules.
The pattern is symmetrical with the rent-vs-buy break-even: an upfront cost paid against a stream of monthly benefits — the answer is always the crossover year, and the crossover only pays if you're still there when it passes.
FAQ
What is a mortgage point?
A fee equal to 1% of the loan amount, paid at closing to reduce the interest rate (a discount point — prepaid interest). Lenders also quote origination fees in “points,” which are costs without a rate attached — the Loan Estimate separates the two.
How much does one point lower your rate?
Typically an eighth to a quarter of a percent per point, varying by lender, market, and loan characteristics. The worked example uses an illustrative 0.25% per point — your actual quote comes from the lender's rate sheet, and the Loan Estimate shows the exact trade.
Are mortgage points worth it?
That's the break-even question: points cost $4,000 each on a $400,000 loan, and on an illustrative 0.25% spread the monthly saving is ~$67 — a ~5-year break-even. Worth it if you keep the loan past the break-even; a loss if you sell or refinance before it. The page prices the trade; the staying-power question is yours and your lender's to answer.
Are points tax-deductible?
Mortgage interest — including points meeting IRS criteria — can be deductible when you itemize, but eligibility depends on your tax situation, and the 2026 standard deduction ($32,200 married-filing-jointly, the figure GR's calculators use) means many borrowers don't itemize at all. Tax treatment is a tax-professional question; the calculator models the pre-tax math.
Is there a limit on points?
Yes — the Qualified-Mortgage rule caps points and fees at 3% of the loan amount for loans of $100,000 or more (CFPB). Beyond the cap, the loan falls outside QM protections.
Sources & method
- Freddie Mac Primary Mortgage Market Survey (PMMS) — 7.03% 30-yr fixed, week of September 24, 2026 — freddiemac.com/pmms (rate snapshot; re-check on publish; point spreads 0.25% labeled illustrative)
- CFPB — Qualified-Mortgage points-and-fees cap (≤3% on loans ≥$100k) — consumerfinance.gov (retrieved 2026-09-25)
- Method: all figures computed with the standard fully-amortizing formulas (the same math this calculator runs in your browser); every number is formula output
- Companion tools: mortgage payment calculator · refinance calculator · mortgage payoff calculator
This page prices the points decision; it does not advise buying, skipping, or financing points. [As-of September 24, 2026] on the PMMS snapshot; spreads are illustrative until a lender quote exists.