Points Break-Even Calculator: Two quotes side by side: the monthly saving from a lower rate and the month the points pay for themselves. Prepaid interest. One discount point costs one percent of the loan amount and lowers the rate by an amount the lender sets, often around a quarter of a percent. Points are paid at closing.
Two quotes from the same lender: one with points, one without. Paying points only wins if you keep the loan past the month they pay for themselves. Type the two quotes and see that month.
Quote A
Quote B (lower rate, more points)
Payment, quote A
$2,628
Payment, quote B
$2,495
Extra points cost
$6,000
Break-even
46 months
Quote B saves $132 a month. Keep the loan longer than 3.8 years and the points were worth it; sell or refinance sooner and they were not.
| If you keep the loan | Quote B is ahead by |
|---|---|
| 5 years | $1,934 |
| 7 years | $5,108 |
| 10 years | $9,868 |
Rates on this page are the ones you typed. This is arithmetic, not an offer to lend, not a quote and not advice; program rules, credit and the lender's pricing decide the real numbers. Ask a licensed loan originator for a Loan Estimate.
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Key facts
One discount point costs 1% of the loan amount and lowers the rate by an amount the lender quotes, often about 0.25%. Break-even months = cost of the points ÷ monthly saving.
The point pays for itself after about five years; a buyer who expects to sell or refinance sooner should take the higher rate and keep the cash.
Points paid on a purchase loan for a main home are generally deductible as mortgage interest in the year paid, if you itemize and the loan and points meet IRS conditions. Points on a refinance are deducted over the life of the loan. Lender credits, the reverse of points, are not income.
Compare what each dollar does. A dollar of points lowers the rate on the whole loan for as long as you keep it; a dollar of down payment reduces the balance and may remove PMI or improve the rate tier. If you may sell within the break-even period, the down payment is the safer use of the cash.
Last reviewed September 8, 2026 by the EstatePass editorial team. Formulas and program limits are checked against the published rules; figures on this page are arithmetic, not market statistics.
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