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Mortgage points break-even calculator

Compare two mortgage rates and calculate the upfront discount-point cost, monthly payment savings, total interest difference, and break-even month.

  • USD inputs · transparent calculation assumptions
  • Instant updates as inputs change
  • Data is calculated in this browser only
USD inputs · transparent calculation assumptions
Your scenario
Updates as you type
Break-even time31 months
Upfront discount-point cost
$3,200.00
Payment without points
$2,075.51
Payment with points
$1,970.30
Monthly payment savings
$105.22
Total interest without points
$427,185.01
Total interest with points
$389,306.21
Lifetime savings after point cost
$34,678.79
Calculation notes

Understand the Mortgage points break-even calculator

The Mortgage Points Break-Even Calculator validates every input, normalizes monthly and annual amounts, and calculates point cost, rate reduction, monthly savings, interest, and break-even month from one consistent scenario.

Formula and logic

How does the Mortgage Points Break-Even Calculator calculate point cost, rate reduction, monthly savings, interest, and break-even month?

One discount point costs 1% of the loan. Upfront cost C = principal × points/100. Compute both fixed-rate monthly payments with the amortization equation; monthly savings S = payment without points − payment with points. Simple break-even months = ceil(C/S) when S is positive.

Worked example

What does a worked Mortgage Points Break-Even Calculator example show?

A $320,000 loan with one point costs $3,200 upfront. If the quoted rate reduction saves $100 monthly, simple break-even is 32 months. Staying only two years would recover $2,400, leaving $800 of point cost unrecovered.

How to read the result

How should I interpret the Mortgage Points Break-Even Calculator results?

  • Despite its historical route name, this tool compares discount points, not a rate-lock-extension fee.
  • Compare the break-even month with the expected sale, payoff or refinancing date.
Limits and assumptions

Which costs, rules, or risks are outside the Mortgage Points Break-Even Calculator?

  • Simple payback excludes discounting, taxes and differences in remaining balances at an early exit. The model pays points upfront rather than financing them.

Content and calculation reviewed:

Understand the calculation

How to use it and the math behind it

Read the complete explanation

Four steps to check your inputs and results

  1. Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
  2. Prepare Loan amount, Rate without points, Discount points purchased, Rate with points, Loan term. Defaults demonstrate the model rather than your personal circumstances.
  3. Check the headline result and its components. A key interpretation for this tool is: Despite its historical route name, this tool compares discount points, not a rate-lock-extension fee.
  4. Compare the baseline with a changed scenario: Compare the break-even month with the expected sale, payoff or refinancing date.

Solve the break-even equation, then round the period

Break-even sets cumulative benefit equal to the cost to recover. Dividing solves the linear equation only if benefit per period stays constant. A result of 30.2 months means the original cost has not yet been fully recovered at month 30; whole-month reporting rounds up to 31.

Simple payback = upfront cost / saving per period
Break-even units = fixed cost / (price − variable cost)
Whole periods or units = ceil(calculated result)

The detailed guide adds variable definitions, a reproducible example, a practice question and model limitations.

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