Mortgage Points Calculator 2025: Are Points Worth It?
Should you buy mortgage points in 2025? Each point costs 1% of your loan but lowers your rate 0.25%. On a $400K loan, 2 points cost $8,000 but save you $115/month. Break-even: 70 months. Here is the complete calculator and analysis.
🧮 Calculate If Points Are Worth It for YOUR Loan
Enter your loan amount and see exact break-even point. Compare with vs without points from 50+ lenders.
Calculate Your Points Savings →⚡ Quick Answer: Should You Buy Points?
✅ Buy Points If:
- • You will stay 6+ years
- • You have extra cash for closing
- • You want lowest possible payment
- • Rates are high (6%+)
- • You will NOT refinance soon
Example Savings:
$400K loan, 2 points ($8K), save $115/month = break-even 70 months. Stay 10 years = save $5,800 total.
❌ Skip Points If:
- • You will sell/refinance in less than 5 years
- • You need cash for emergencies
- • Rates will likely drop (you will refi)
- • You can invest cash at higher return
- • You are buying a starter home
Example Loss:
Pay $8K for points, sell after 3 years = only save $4,140. LOSE $3,860!
💡 THE VERDICT
Points are worth it ONLY if you stay past break-even (typically 5-7 years). In 2025 with rates at 6.19%, buying 2 points to get 5.69% makes sense IF you are buying your forever home. Compare with and without points to see your exact numbers.
🎯 What Are Mortgage Points?
Mortgage points (also called discount points) are upfront fees you pay to lower your interest rate. Each point costs 1% of your loan amount.
How Points Work:
1 Point = 1% of Loan Amount
- • $200K loan: 1 point = $2,000
- • $400K loan: 1 point = $4,000
- • $600K loan: 1 point = $6,000
1 Point = 0.25% Rate Reduction (Typical)
- • Start rate: 6.19%
- • Buy 1 point: 5.94%
- • Buy 2 points: 5.69%
- • Buy 3 points: 5.44%
⚠️ IMPORTANT
The 0.25% reduction per point is typical but NOT guaranteed. Some lenders offer 0.20% or 0.30% per point. Always ask for exact rate reduction before buying points!
🧮 Break-Even Calculator Examples
Here are real break-even calculations for different loan amounts:
Example 1: $400K Loan, 2 Points
Without Points:
- • Rate: 6.19%
- • Monthly payment: $2,449
- • Upfront cost: $0
With 2 Points:
- • Rate: 5.69% (-0.50%)
- • Monthly payment: $2,334
- • Upfront cost: $8,000
Break-Even Analysis:
- • Monthly savings: $115
- • Break-even: $8,000 / $115 = 70 months (5.8 years)
- • Stay 10 years: Save $13,800 - $8,000 = $5,800 profit
- • Stay 3 years: Save $4,140 - $8,000 = $3,860 LOSS
Example 2: $600K Loan, 1 Point
Without Points:
- • Rate: 6.19%
- • Monthly payment: $3,674
- • Upfront cost: $0
With 1 Point:
- • Rate: 5.94% (-0.25%)
- • Monthly payment: $3,587
- • Upfront cost: $6,000
Break-Even Analysis:
- • Monthly savings: $87
- • Break-even: $6,000 / $87 = 69 months (5.8 years)
- • Stay 10 years: Save $10,440 - $6,000 = $4,440 profit
Example 3: $800K Loan, 3 Points
Without Points:
- • Rate: 6.19%
- • Monthly payment: $4,898
- • Upfront cost: $0
With 3 Points:
- • Rate: 5.44% (-0.75%)
- • Monthly payment: $4,534
- • Upfront cost: $24,000
Break-Even Analysis:
- • Monthly savings: $364
- • Break-even: $24,000 / $364 = 66 months (5.5 years)
- • Stay 10 years: Save $43,680 - $24,000 = $19,680 profit
🤔 When to Buy vs Skip Points (Decision Framework)
✅ Buy Points If:
1. You are Buying Your Forever Home
Staying 10+ years? Points are a no-brainer. You will be well past break-even and save thousands.
2. You Have Extra Cash After Closing
Still have 6+ months emergency fund AFTER buying points? Go for it. Never sacrifice emergency savings for points.
3. Rates Are High (6%+)
When rates are high, buying them down makes more sense. Dropping from 6.19% to 5.69% saves more than dropping from 4% to 3.5%.
4. You Want Lowest Possible Payment
On fixed income or tight budget? Lower payment might be worth the upfront cost for peace of mind.
❌ Skip Points If:
1. You Will Refinance When Rates Drop
Rates likely to drop to 5.5% by 2026? You will refinance and lose your points investment. Skip them.
2. You Are Buying a Starter Home
Planning to upgrade in 3-5 years? You will not hit break-even. Save your cash for the next down payment.
3. You Need Cash for Emergencies or Repairs
Emergency fund less than 6 months? House needs repairs? Keep your cash. Points are NOT worth going broke.
4. You Can Invest Cash at Higher Return
If you can earn 7-8% in stock market vs 5-6% effective return from points, invest instead. Math favors investing.
🧮 Calculate Your Exact Break-Even Point
Enter your loan amount and see if points are worth it for YOU. Compare rates with and without points from 50+ lenders.
Calculate My Points Savings →❓ Frequently Asked Questions
Are mortgage points worth it in 2025?
Yes, IF you stay past break-even (typically 5-7 years). With rates at 6.19%, buying 2 points to get 5.69% saves $115/month on $400K loan. Break-even is 70 months. Stay 10 years = save $5,800 total.
How much does 1 mortgage point cost?
1 point = 1% of loan amount. $200K loan = $2,000 per point. $400K loan = $4,000 per point. $600K loan = $6,000 per point. You can buy fractional points (0.5 points, 1.5 points, etc.).
How much does 1 point lower your rate?
Typically 0.25% per point, but varies by lender. Some offer 0.20% or 0.30%. Always ask your lender for exact rate reduction. Example: 6.19% rate - buy 2 points = 5.69% (0.50% reduction).
Can I deduct mortgage points on my taxes?
Yes! Points are tax-deductible in the year you buy your home (if you itemize). This reduces the effective cost. $8,000 in points at 24% tax bracket = $1,920 tax savings = effective cost $6,080.
What happens to my points if I refinance?
You lose them. If you paid $8,000 for points and refinance after 3 years, you only saved $4,140. You LOSE $3,860. This is why you should not buy points if you plan to refinance soon.
Should I buy points or make a larger down payment?
Usually better to make larger down payment. Reduces loan amount AND avoids PMI if you hit 20%. Points only lower rate. Exception: If you are already at 20% down and have extra cash, points can make sense.
Can I negotiate the cost of points?
Yes! Some lenders offer better point pricing than others. Compare multiple lenders to find best point pricing. Rate reduction per point can vary 0.20-0.30%.
What is the difference between discount points and origination points?
Discount points lower your rate (what we discussed). Origination points are lender fees (typically 1% of loan). Origination points do NOT lower your rate - they are just fees. Always ask which type you are being charged!
🎯 Compare Rates With and Without Points
See your exact savings and break-even point. Compare 50+ lenders. Free, no obligation, 3-minute process.
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