# Are mortgage points worth it for me?

Computes what mortgage discount points cost, the monthly payment with and without them, the monthly saving, the months to break even, and the net saving over the years you keep the loan.

- Page: https://www.acalculator.org/finance/mortgage-points-calculator
- JSON spec: https://www.acalculator.org/finance/mortgage-points-calculator.json
- Version: c5257f8be5c7

## Default answer

Example with the default inputs (Loan amount $300,000.00, Loan term (years) 30, Rate with no points 7%, Points to buy 1, Rate with the points 6.75%, Years you keep the loan 10): The points cost $3,000.00 and save $50.11 a month, so they pay for themselves after 60 months.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| amount | Loan amount | The amount you borrow. |
| term | Loan term (years) | The length of the loan in years, paid monthly. |
| rate | Rate with no points | The yearly interest rate your lender offers with zero points. |
| points | Points to buy | How many discount points: 1 point costs 1% of the loan amount. Fractions such as 0.375 are fine. |
| lower | Rate with the points | The yearly rate the lender offers if you buy those points. It must be lower than the rate with no points. |
| keep | Years you keep the loan | How long you expect to keep the loan before you sell or refinance. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| breakEven | Months to break even | Cost of the points ÷ the monthly saving, rounded up to a whole month. |
| cost | Cost of the points | Loan amount × points ÷ 100. |
| payment | Monthly payment, no points | Principal and interest at the rate with no points. |
| paymentPoints | Monthly payment with points | Principal and interest at the rate with the points. |
| saving | Monthly saving | The payment with no points − the payment with points. |
| net | Net saving over the years you keep it | Monthly saving × 12 × years kept − cost of the points. |
| years | Years to break even | Months to break even ÷ 12. |
| verdict | Worth it? | Whether you keep the loan past the break-even month. |

## Method

Cost = loan × points ÷ 100; payment = P·r ÷ (1 − (1 + r)^−n) with r = rate ÷ 12 and n = years × 12; saving = payment without points − payment with points; break-even = cost ÷ saving, rounded up; net = saving × 12 × years kept − cost.

## Assumptions

- One point costs 1% of the loan amount (CFPB).
- Fixed-rate loan with monthly payments; both rates are the ones your lender quotes you (type them).
- The comparison uses monthly payments only: no interest on the cash you pay for the points, no taxes.

## Worked examples

1. amount = $300,000.00, term = 30, rate = 7%, points = 1, lower = 6.75%, keep = 10 gives cost = $3,000.00, payment = $1,995.91, paymentPoints = $1,945.79, breakEven = 60. Source: CFPB, How should I use lender credits and points? (one point equals one percent of the loan amount), https://www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/.
2. amount = $100,000.00, term = 30, rate = 6%, points = 1.375, lower = 5.75%, keep = 5 gives cost = $1,375.00, breakEven = 87. Source: CFPB, How should I use lender credits and points? (1.375 points on a $100,000 loan is $1,375), https://www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/.
3. amount = $200,000.00, term = 15, rate = 0.5%, points = 0.5, lower = 0%, keep = 15 gives cost = $1,000.00, paymentPoints = $1,111.11, payment = $1,153.53, breakEven = 24. Source: CFPB, How should I use lender credits and points? (0.5 points on $100,000 is $500, so on $200,000 it is $1,000), https://www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/.

## FAQ

### What are mortgage points?

Discount points are a fee you pay the lender at closing for a lower interest rate. The CFPB says one point equals one percent of the loan amount: one point on a $100,000 loan is $1,000. Points do not have to be whole numbers; 0.375 points on $100,000 is $375.

### How do I know if buying points is worth it?

Divide the cost of the points by the monthly saving to find the break-even month. If you keep the loan longer than that, the points save money; if you sell or refinance sooner, they cost more than they save. One point at $300,000 that lowers 7% to 6.75% saves $50.11 a month and breaks even in month 60.

### How much does one point lower the rate?

It depends on the lender and the market, so this calculator does not guess. Ask your lender for the rate at zero points and with the points you are thinking about, then type both. The CFPB suggests comparing offers with the same points at different lenders.

### Are points the same as the origination fee?

No. Discount points buy a lower rate. An origination fee pays the lender for making the loan and does not lower the rate. Both show on your Loan Estimate.

### What are lender credits?

The opposite of points: the lender pays part of your closing costs and you take a higher rate. Your payment goes up but you bring less cash to closing.

### Does the break-even include interest on the cash I pay?

No. The calculator compares the monthly payments only. Money you pay for points could have earned interest or paid down the loan, so the true break-even is a little later.

## Sources

- Consumer Financial Protection Bureau (CFPB), How should I use lender credits and points (also called discount points)? (one point equals one percent of the loan amount; one point on $100,000 is $1,000; 1.375 points is $1,375, 0.5 points $500, 0.125 points $125; paying points lowers your interest rate compared with a zero-point loan at the same lender). https://www.consumerfinance.gov/ask-cfpb/what-are-discount-points-and-lender-credits-and-how-do-they-work-en-136/ (retrieved 2026-10-02)