Mortgage Discount Points Calculator

What are mortgage discount points?

Discount points are fees you pay upfront to permanently lower your mortgage interest rate. One point equals 1% of the loan amount and typically reduces your rate by about 0.25 percentage points.

How much does one point cost?

One point costs 1% of your loan amount. On a $300,000 mortgage, one point costs $3,000. The cost is paid at closing and can sometimes be financed into the loan.

How much does one point lower my rate?

On average one point lowers your rate by about 0.25 percentage points, but the exact reduction varies by lender and market. Always ask your lender for their current points-to-rate buydown table.

What is the break-even point for buying points?

Your break-even point is the number of months it takes for your monthly savings to equal the upfront cost of the points. If you sell or refinance before break-even, you lose money. After break-even, you save every month you keep the loan.

Are mortgage points tax deductible?

Points paid on a purchase mortgage are usually deductible in the year you pay them. Points paid on a refinance are typically deducted over the life of the loan. Consult a tax professional for your situation.

Points vs. mortgage buydown — what is the difference?

Points permanently lower your rate for the life of the loan. A buydown (like a 2-1 or 3-2-1 buydown) only lowers your rate temporarily for the first few years, then the rate returns to the note rate.

Should I buy points if I plan to move soon?

Usually no. If you plan to sell or refinance before the break-even point, buying points will cost you more than you save. The calculator above shows your break-even so you can decide.