Mortgage Points Calculator
What a point costs, what it saves, and when it genuinely pays for itself — measured against the alternative of putting the same money onto your loan balance.
Ask your lender. It varies between lenders on the same day and changes the answer more than anything else here.
Leave at zero unless you itemize and the points are on a purchase. Points on a refinance are deducted across the life of the loan.
The usual formula — cost divided by monthly saving — says 5 yr 1 mo. It assumes the $4,000 would otherwise sit idle.
Compared with putting the same $4,000 onto the balance instead.
Holding the loan 7 years, the point leaves you $666 ahead of simply paying down the balance.
The two break-evens, and why they differ
Every points calculator gives you the number on the left: what you paid, divided by what you save each month. On a $400,000 loan at 6.66%, one point costs $4,000, saves $66 a month, and pays for itself in 61 months.
That figure quietly assumes your alternative is doing nothing with $4,000. It isn’t. Hand the same money to your lender as a principal reduction at closing and it lowers your balance for the entire life of the loan. Measured against that, the point doesn’t pull ahead until month 71. The marketing break-even is optimistic by about ten months.
Drag the horizon slider and you’ll see the shape of it. Points lose in the early years, win through the middle, and lose again if you hold the loan to the end — because $4,000 applied at month one stops compounding for three decades and retires the loan roughly eleven months early.
The input that matters most
Not the loan size. Not the rate. What the lender gives you for the point. At 0.25% off, the simple break-even on that $400,000 loan is 5.1 years; at 0.125%, it’s 10.1. Same money, same loan, completely different decision — and there is no standard, so the only way to know is to ask.
If a loan officer quotes you points without volunteering the rate reduction, that is the question to put back to them before anything else.
Before you use the tax field
Points are prepaid interest. On a purchase they can generally be deducted in the year you pay them, which shortens the break-even meaningfully — in the 22% bracket, from 5.1 years to 3.9. On a refinance you have to amortise them over the loan term instead, which comes to a few dollars a month.
Both only matter if you itemize, and since the standard deduction rose most households don’t. Check with the mortgage interest deduction calculator before you assume a tax benefit, and read the full guide to mortgage points for the refinance rules, including the deduction most people miss when they refinance a second time.