Mortgage Points Cost Calculator: Upfront Cost to Buy Down a Rate
Work out the upfront cost of mortgage discount points — the cash you pay at closing to lower your interest rate for the life of the loan.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Points cost | Loan amount unchanged |
|---|---|---|
| 2 points on $400,000 | 8,000 | 392,000 |
| 1 point on $250,000 | 2,500 | 247,500 |
| 0.5 points on $600,000 | 3,000 | 597,000 |
| 3 points on $200,000 | 6,000 | 194,000 |
How This Calculator Works
Enter the loan amount and the number of points you are considering buying. The calculator multiplies the two to give the points cost. One point is 1% of the loan and typically lowers the rate by about 0.25%, though the exact rate cut varies by lender and loan program.
The Formula
Percentage of an Amount
Amount is the base value, Percentage is the rate applied to it
Worked Example
Buying 2 discount points on a $400,000 mortgage costs $8,000 upfront, in exchange for roughly a 0.5% lower rate (about 0.25% per point). On a 30-year loan, that rate cut typically saves $115 to $135 a month — so the points pay back in about 60 to 70 months.
Key Insight
Points are worth buying when you plan to keep the loan past the breakeven month. Most homeowners refinance or move well before 30 years, so the average loan life is under 8 years — and points break even somewhere between 5 and 8 years. If you might move or refinance sooner, the cash is better in your pocket.
Frequently Asked Questions
How is the cost of mortgage points calculated?
One point is 1% of the loan amount. Multiply the loan by the number of points. Two points on a $400,000 loan is $8,000.
How much does one point lower the rate?
Typically about 0.25%, though the exact reduction varies by lender, program, and market. Some lenders offer more aggressive buy-downs; others less.
When do mortgage points break even?
Divide the points cost by the monthly payment saved. A 60-month breakeven means the points pay back after 5 years of holding the loan — past that, the savings are pure benefit.
Are mortgage points tax deductible?
In the US, points on a primary-home purchase mortgage are usually deductible in the year paid if itemizing. Refinance points are typically deductible over the loan's life. Tax rules change — confirm with a current source.
Should I buy points if I might refinance?
Probably not. Points only pay off if you keep the loan past the breakeven, so refinancing or selling early wastes the upfront cost. Buy points when the loan is one you expect to keep for years.
Related Calculators
Data Sources & Benchmarks
This calculator draws on 1 independent, dated source.
Methodology & Review
One mortgage discount point costs 1% of the loan amount and typically buys down the rate by about 0.25%. The calculator computes the upfront cost from the loan amount and the number of points purchased; the rate reduction and the breakeven need a separate calculation.
Written by Ugo Candido · Last updated May 17, 2026.