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Mortgage Points Calculator

Compare the cost of buying mortgage points against monthly savings and break-even time.

Introduction

Mortgage Points Calculator — Compare the cost of buying mortgage points against monthly savings and break-even time. Enter Loan amount, Annual rate (%), Term (years), Points purchased, Rate reduction per point (%) to get an instant, accurate result.

Formula

Cost of points = loan amount × points / 100 (1 point = 1% of the loan amount, paid upfront). Reduced rate = original rate − (rate reduction per point × points), using a default reduction of 0.25% per point (a typical approximation — actual lender pricing varies). Both the original and reduced payment use the standard amortization formula M = P·r(1+r)ⁿ/((1+r)ⁿ−1). Break-even months = cost of points / monthly savings.

Step-by-step

  1. Enter the Loan amount.
  2. Enter the Annual rate (%).
  3. Enter the Term (years).
  4. Enter the Points purchased.
  5. Enter the Rate reduction per point (%).
  6. Click Calculate to see your result instantly.

Real-world example

Example: With Loan amount = 300000, Annual rate (%) = 6.5, Term (years) = 30, Points purchased = 1, Rate reduction per point (%) = 0.25, the Mortgage Points Calculator gives Cost Of Points: 3000, Reduced Rate Pct: 6.25, Original Payment: 1896.2041.

Frequently Asked Questions

Is 0.25% per point a guaranteed rate reduction?
No — it's a commonly used rule of thumb. Actual rate buydowns vary by lender, loan program, and market conditions, so confirm the real pricing on your rate sheet.
When is buying points worth it?
Generally when you plan to keep the loan longer than the break-even period — if you'll sell or refinance before then, the upfront cost likely won't be recovered in monthly savings.
What inputs does the Mortgage Points Calculator need?
You'll need to provide: Loan amount, Annual rate (%), Term (years), Points purchased, Rate reduction per point (%). All fields use sensible defaults, so you can see a working example immediately and then adjust the values to match your own numbers.
How accurate is the Mortgage Points Calculator?
The Mortgage Points Calculator applies the formula exactly as calculated — Cost of points = loan amount × points / 100 (1 point = 1% of the loan amount, paid upfront). Reduced rate = original rate − (rate reduction per point × points), using a default reduction of 0.25% per point (a typical approximation — actual lender pricing varies). Both the original and reduced payment use the standard amortization formula M = P·r(1+r)ⁿ/((1+r)ⁿ−1). Break-even months = cost of points / monthly savings. — so results are precise for the inputs you provide. Accuracy depends on entering correct, realistic input values.
Is the Mortgage Points Calculator free to use?
Yes, the Mortgage Points Calculator is completely free, requires no signup, and runs instantly in your browser.

About the Mortgage Points Calculator

The Mortgage Points Calculator uses a real, verifiable formula — Cost of points = loan amount × points / 100 (1 point = 1% of the loan amount, paid upfront). Reduced rate = original rate − (rate reduction per point × points), using a default reduction of 0.25% per point (a typical approximation — actual lender pricing varies). Both the original and reduced payment use the standard amortization formula M = P·r(1+r)ⁿ/((1+r)ⁿ−1). Break-even months = cost of points / monthly savings. — so results are accurate every time, not an approximation.