Calculate if buying mortgage points makes financial sense. See break-even timeline and lifetime savings. Free mortgage points calculator. No signup.
Mortgage points (discount points) let you pay upfront to get a lower interest rate — each point costs 1% of the loan amount and typically reduces your rate by 0.25%. Paying $3,000 upfront on a $300,000 loan to save $50/month breaks even in 60 months. If you stay longer than 5 years the points paid for themselves. Our calculator shows your exact break-even point and lifetime savings.
One discount point costs 1% of loan amount. On $350,000 loan: 1 point = $3,500 upfront. Rate reduction per point: typically 0.20-0.25% depending on lender. Example: rate drops from 7.0% to 6.75% — monthly payment drops $57/month on $350,000 loan. Break-even: $3,500 / $57 = 61 months or 5.1 years. If staying 10+ years: points save $3,340 in lifetime interest after break-even.
Points are worth buying when: You plan to stay in the home well beyond break-even point. You have cash available beyond down payment and emergency fund. Rates are high and you expect to stay long-term rather than refinance when rates drop. Points are NOT worth buying when: You may move or refinance within 5 years. You need the cash for other purposes. You expect rates to drop and plan to refinance within 2-3 years.
Yes — points paid on a home purchase are fully deductible in the year paid if you itemize deductions. Points paid on a refinance must be deducted over the life of the loan (amortized). On a $350,000 loan with 1 point ($3,500): at 22% tax bracket that deduction saves $770 in taxes in year one — effectively reducing the real cost of the points.
Most lenders offer 0-3 points. Beyond 2 points the rate reduction per additional point often diminishes — check diminishing returns carefully. A common sweet spot: 0.5-1 point if you plan to stay 7+ years. Calculate break-even for each increment: half point, one point, two points — buy only up to the amount that breaks even within your expected stay duration.
Discount points are prepaid interest that lower your rate — each point (1% of loan) typically reduces rate 0.20-0.25%. Origination points are a fee the lender charges to process the loan — they do NOT lower your rate. Only discount points are tax-deductible as mortgage interest. Always confirm on your Loan Estimate which type of points the lender is charging before paying.
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The Mortgage Points Calculator — Is Buying Down Your Rate Worth It? uses the same formulas, rates, and reference data that financial planners, professionals, and government sources publish. Results are estimates intended for planning and education — for situations involving large sums or legal consequences, confirm with a qualified professional before acting.
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