Loan Details
1 point = 1% of the loan amount. Up to 5.
Up to 1%. Use the figure on your Loan Estimate.
From 1 to the 30-year loan term.
If you keep the loan 7 years, the points save you $2,596. If you sell or refinance before month 48 (4 yr 0 mo), they cost you more than they save.
Break-even month (counting interest saved)
Month 48
4 yr 0 mo into the loan
Monthly savings alone repay the points in month 60.
Cost of Points
$3,400
New Interest Rate
6.78%
Monthly P&I (No Points)
$2,268.88
Monthly P&I (With Points)
$2,212.02
Monthly Savings
$56.86
Net After 7 Years
+$2,596
savings plus faster payoff of principal at the lower rate, minus cost of points, at your planned holding period
Net Over 30-Year Term
+$17,071
savings minus cost of points, if you keep the loan to the end
Assumes each point lowers the rate by 0.25%. Lenders vary; use the rate on your Loan Estimate.
How much do points cost?
1, 2 and 3 points on your $340,000 loan at 7.03%, 0.25% off per point.
| Points | Cost | New rate | Monthly savings | Break-even month |
|---|---|---|---|---|
| 1 point | Cost$3,400 | New rate6.78% | Monthly savings$56.86 | Break-even monthMonth 48 |
| 2 points | Cost$6,800 | New rate6.53% | Monthly savings$113.14 | Break-even monthMonth 48 |
| 3 points | Cost$10,200 | New rate6.28% | Monthly savings$168.81 | Break-even monthMonth 48 |
Based on: the default rate is the Freddie Mac Primary Mortgage Market Survey average for the loan term, retrieved through FRED, as of September 24, 2026. See the methodology for formulas and sources. Results are estimates, not a loan quote.
Assumptions: fixed-rate loan; the same loan amount with and without points; points paid in cash at closing; principal and interest only, with no taxes, insurance, PMI or escrow; the rate reduction per point is your input, not a lender quote.
Every example below uses one loan: $340,000 for 30 years at 7.03%, with each point lowering the rate by 0.25% and the loan kept for 7 years.
What mortgage points are
Mortgage points, also called discount points, are prepaid interest. You pay the lender cash at closing and get a lower rate for the life of the loan. One point costs 1% of the loan amount. On the example loan, one point costs $3,400 and lowers the rate from 7.03% to 6.78%.
For more on how lenders price them, read our guide to mortgage points.
How much are 1, 2 or 3 points?
On the example loan, 1 point costs $3,400, 2 points cost $6,800 and 3 points cost $10,200. The rate falls to 6.78%, 6.53% and 6.28%, and the payment drops by $56.86, $113.14 and $168.81 a month. Your lender’s cut per point may differ.
How to find your break-even month
The break-even month is the first month when the cost of the points plus the interest you pay is no more than the interest you would pay without them. On the example loan that is month 48. Dividing the cost by the monthly savings gives month 60, later, because it ignores the extra principal the lower rate pays down.
Keep the loan 7 years and the point saves $2,596: $4,777 in lower payments plus a balance $1,219 lower, minus its $3,400 cost. To compare a lender’s no-points and one-point offers side by side, use the Mortgage Comparison Calculator.
Why the rate cut per point matters most
With a fixed cut per point, 1, 2 and 3 points all break even in month 48 on the example loan, because cost and savings grow together. What changes the answer is the rate your lender actually quotes per point. Compare your Loan Estimate with and without points.
When points usually don’t pay off
Points rarely pay off if you sell or refinance before the break-even month, because the money you spent does not come back. On the example loan, keeping it 3 years leaves you $838 behind. The tax treatment of points depends on your situation and IRS rules, so ask a tax professional.
If you might refinance, points add to the closing costs the new loan has to recover. The Refinance Break-Even Calculator shows whether a new loan would pay back its own costs.
Related Calculators
Mortgage Calculator
Estimate your monthly payment with full amortization schedule.
Refinance Break-Even Calculator
Find the month a refinance pays for itself.
Extra Payment Calculator
See how extra payments shorten your loan and cut interest, or find the extra needed to pay it off by a target date.
Comparison Calculator
Compare two loan offers by rate, points and fees.
Related Guides
Mortgage Points Explained: Are They Worth Buying?
Mortgage discount points let you pay upfront to lower your interest rate. But is it always a smart move? Here is everything you need to know before you decide.
The Complete Guide to Mortgage Refinancing: When It Makes Sense and When It Doesn't
Refinancing can save you thousands — or cost you money. This guide breaks down every scenario so you can make the right decision for your situation.
Closing Costs Explained: What You Will Pay and How to Reduce Them
Closing costs can add thousands to your home purchase. Here is exactly what you are paying for — and smart strategies to reduce or even eliminate some of these fees.
How to Read a Loan Estimate: A Line-by-Line Guide
The Loan Estimate is one of the most important documents in the mortgage process. Here is how to decode every section so you can compare lenders with confidence.