Mortgage Points Calculator: True Break-Even for Each Quote

The table uses the tool's default inputs. The no-points rate is 7.24%, the Freddie Mac PMMS 30-year average for the week of October 29, 2026. The three quotes beneath it are invented for this illustration, because no published schedule links a point to a particular rate cut.

Inputs: $400,000, 30-year fixed, principal and interest only, computed with the site's amortization formula. The 7.24% base is the PMMS week of October 29, 2026; the quoted rates are illustrative. On the credit row the two months mean something else, explained below.

Take each quote from its Loan Estimate, where the CFPB says points sit on page 2, Section A. A mortgage points calculator can only compare what you feed it, and this one assumes every other closing cost is equal. If one option also carries a higher lender fee, add that fee to its points before you read the result. Each payment here is the same principal-and-interest figure the principal and interest calculator gives, with escrow left out.

The simple break-even counts only the drop in your monthly payment. That leaves out something real: at the lower rate, more of every payment goes to principal, so you also owe less. Selling or refinancing at month 50 would mean paying off a smaller balance.

Here is the first month of the 1-point quote. Interest is $2,413.33 at 7.24% and $2,333.33 at 7.00%, a difference of $80.00. Your payment falls by $64.78, and the other $15.22 goes to extra principal. Both parts are money you keep.

Add them up by month 50 and the payment saving is $3,239.13 while the balance is $787.71 lower, for a total of $4,026.84. That clears the $4,000 cost. One month earlier the total was $3,945.89, which falls short. By the simple sum, you would wait until month 62.

That is why this mortgage points calculator totals cash at closing, every payment and the remaining balance for each option at each month. The difference between two totals is your net gain or loss if the loan ended that month. It equals the interest you have avoided, less the points. One limit: the method treats a dollar today like a dollar in year seven, and it ignores what the cash could have earned elsewhere.

Plenty of mortgage points calculators assume a fixed discount per point. Treat that as an assumption, never as a market fact. The CFPB says that sometimes the reduction for each point is relatively large and other times it could be smaller. The break-even moves a lot with that one number.

Illustrative only: one point ($4,000) on a $400,000 30-year fixed loan with a 7.24% no-points rate (PMMS, week of October 29, 2026). Computed by this site. These are what-if cuts, and none is a quote from any lender.

The spread runs from a purchase that loses money over seven years to one that pays for itself in two. That is the reason to get the actual rate for each option in writing. The CFPB's own worked example on the same page has a $180,000 loan at 5.0% moving to 4.875% for $675, which is 0.375 points; it rounds the saving to $14 a month. Unrounded, the saving is $13.70, so that purchase repays at month 50 on the simple sum and month 37 once the lower balance is counted.

The CFPB describes lender credits as working the same way as points, in reverse: you take a higher rate and the lender gives you money toward closing costs. A lender's worksheet might call a $1,000 credit on a $100,000 loan negative one point. Credits appear as a negative number in the Lender Credits line on page 2, Section J of the Loan Estimate.

Enter a credit as negative points and the tool reverses the reading. You start ahead by the size of the credit and slowly fall behind, so the question changes from when you catch up to how long the credit stays worth having.

In the −1 point quote above, you receive $4,000 and pay $70.87 more a month. Month 57 is when the extra payments alone add up to the credit. Month 46 is the one that matters: from then on the higher rate has cost more than the credit, counting the slower paydown. Sell or refinance before month 46 and the credit was the better deal; hold beyond it and you would have been better off at 7.24%.

A short stay is the natural case for a credit, and for a borrower short of cash at closing, the credit may be what makes the purchase possible at all. The CFPB also warns that the words get used loosely. Some lenders say “points” for any upfront fee calculated as a percentage of the loan, whether or not the rate falls, and some credits have nothing to do with the rate. Ask which kind you are looking at, because this comparison only works for points and credits tied to the rate.

If there is one input to take seriously, it is how long you will keep the loan, because a sale or refinance ends the trade. The CFPB suggests asking a loan officer to total the costs over the shortest, the longest and the most likely time you can see yourself keeping the loan. Do the same here by changing one box.

Net gain against the no-points loan, before tax. Same illustrative quotes and inputs as the first table; base rate from the PMMS week of October 29, 2026. Computed by this site.

Over three years the credit wins and both buydowns lose money. By five years the order has flipped, and the gap keeps widening. Note what the 30-year row is really telling you: it is the outcome only if you never sell or refinance. If your rate-buying decision rests on that bottom row, weigh it honestly against the chance that you will move, or that lower rates will tempt you into a refinance and end the loan you paid to discount.

The CFPB adds a useful warning: if you do not know how long you will stay or when you will want to refinance, and you have enough cash for closing and savings, you might not want to pay points or take a credit at all.

Points are not the only way to spend spare cash on a mortgage. You could take the 7.24% loan and put the same $4,000 straight against principal. The payment stays at $2,725.99, but interest stops running on that money from the start.

Illustrative comparison on $400,000, 30 years. Both columns use the same measure (cash out, payments and remaining balance against the plain 7.24% loan). 7.24% is the PMMS average for the week of October 29, 2026. Computed by this site.

With these rates, points overtake prepayment at month 81. A prepayment gives no cut in the monthly payment; it shortens the loan instead, here from 360 payments to 348. Points lower the bill each month from day one. If you lean toward paying down, the extra payments calculator shows the effect on your payoff date, and the rate calculator with amortization shows what a different rate does to the whole schedule. This table is one set of rates, so run your own quotes through the mortgage points calculator before reading anything general into it.

The calculator stops before tax because the answer depends on your return. IRS Publication 936 (2025) says you generally cannot deduct the full amount of points in the year paid: as prepaid interest, they are generally deducted ratably over the life of the loan. On $4,000 of points on a 360-month loan, ratably means $11.11 a month, or $133.33 a year of deduction, which is not the same as $133.33 of tax saved.

The publication sets out a list of tests for deducting points in full in the year paid. In short:

• The loan is secured by your main home and is used to buy or build it.
• Paying points is an established business practice in your area, and the amount does not exceed what is generally charged there.
• You use the cash method of accounting.
• The points are not paid in place of amounts normally stated separately on the settlement statement, are a percentage of the mortgage principal, and are clearly shown on that statement.
• The funds you provided at or before closing, plus any points the seller paid, at least equal the points charged, and you did not borrow those funds from the lender or broker.

Three cases follow different rules. Points paid to refinance generally cannot be deducted in full in the year paid, though the part tied to substantially improving your main home can qualify. Points on a loan secured by a second home can only be deducted over the life of the loan. And if a mortgage you have been spreading points over ends early, you can generally deduct the remaining balance that year, except when you refinance with the same lender, where it carries over the new loan's term.

The deduction is claimed by itemizing on Schedule A, so a borrower taking the standard deduction gets nothing from it. Treat this as a summary of the 2025 publication and not as tax advice; a tax professional can apply it to your return.