Mortgage Calculator with Points
Compare a mortgage quote without points against a quote with discount points. See point cost, monthly payment, break-even time, interest and net savings.
How this mortgage points calculator works
A discount point is an upfront charge expressed as a percentage of the loan amount. One point is normally 1% of the mortgage principal. The interest-rate reduction bought by that point is not standardized, so this calculator asks for two real quotes: the rate without points and the rate with points.
- Point cost = loan amount × discount points ÷ 100.
- Monthly payment is calculated separately for each rate over the same loan term.
- Payment break-even = net extra upfront cost ÷ monthly principal-and-interest savings.
- Net savings at your horizon = cumulative interest saved − net extra upfront cost.
The fixed-payment formula is M = P × r × (1 + r)n ÷ [(1 + r)n − 1], where P is principal, r is the monthly rate and n is the number of monthly payments. At 0% interest, payment is P ÷ n.
Worked example
For the example above, compare a US$400,000, 30-year mortgage at 6.75% with no points against 6.25% after paying 1.5 points. The points cost US$6,000. The calculator measures the payment difference, estimates when that upfront amount is recovered through lower monthly payments, and then checks the interest saved if the loan is kept for seven years. Change the numbers to match both lender Loan Estimates.
Discount points are not origination points
Discount points are paid to obtain the quoted lower rate. Origination points are lender charges for making the loan and may not reduce the rate. Ask the lender to identify each charge and compare the same loan amount, term, product type and lock period. The Consumer Financial Protection Bureau explains discount points and lender credits and recommends comparing Loan Estimates.
How to interpret break-even
A break-even month inside the expected holding period supports the points quote under the entered assumptions. A later break-even means the borrower may sell, refinance or repay the loan before recovering the upfront cost. The result is sensitive to the actual rate reduction, the point price, lender credits and how long the mortgage remains outstanding.
The payment break-even is a cash-flow measure. The net interest result is an economic-cost measure: it compares interest accumulated under both amortization schedules and subtracts the net upfront difference. These measures can differ because the remaining loan balances are not identical.
Important limits
This is an educational planning estimate, not a lender quote, tax opinion or financial advice. It assumes fixed rates, equal monthly payments, monthly compounding and no extra principal payments. It excludes property tax, insurance, mortgage insurance, escrow changes, daily-interest timing, prepayment penalties, adjustable-rate changes and lender-specific rounding. It does not determine whether points are tax-deductible. Confirm costs, credits, APR, cash to close and eligibility on the official Loan Estimate and with qualified professionals.
Related calculators
- Mortgage Refinance Calculator — compare a replacement loan, closing costs and break-even.
- Mortgage Payoff Calculator — compare extra principal and earlier payoff.
- APR Calculator — estimate annual percentage rate from fees or a known payment.
Frequently asked questions
Does one point always lower the mortgage rate by the same amount?
No. One point describes cost—normally 1% of the loan amount—not a universal rate reduction. Pricing changes by lender, market, loan product, credit profile and lock period. Enter the actual paired quotes.
Can lender credits make the upfront difference negative?
Yes. If the credit entered exceeds the point cost and other extra charges, the calculator treats the points option as having no cash-flow recovery period. Verify whether that credit is available with the entered rate and how it may be used.
Why is the remaining balance slightly different?
Each payment is split between interest and principal using its own rate. Even with the same principal and term, the two amortization schedules can have different balances before maturity.