Mortgage Points ROI Calculator

Estimate whether buying mortgage discount points is worth the upfront cash. Compare monthly payments with and without points, see how long it takes to break even, and review net savings or losses over the period you expect to hold the loan.

Enter the principal you plan to borrow.
Typical fixed mortgages run 15 or 30 years.
Annual percentage rate if you skip buying points.
Leave blank to assume one point (1% of the loan).
Leave empty to estimate a 0.25% drop per point purchased.
Leave blank to evaluate breakeven over seven years.

For illustration only; confirm pricing and tax implications with your lender or advisor.

Examples

  • $400,000 loan, 30-year term, 7.00% → 6.50% with 2 points, 7-year horizon ⇒ payment drops $132.94/mo, breakeven ~60 months, ~$3,167 net savings (39.58% ROI)
  • $750,000 loan, 30-year term, 6.80% → 6.55% with 1 point, 10-year horizon ⇒ payment drops $124.24/mo, breakeven ~60 months, ~$7,409 net savings (98.78% ROI)

FAQ

Are points refundable if I refinance soon?

No. Discount points are prepaid interest collected at closing, so refinancing before breakeven typically means the upfront cost is sunk.

Do points always lower the rate by 0.25%?

The rate reduction varies by lender, lock period, credit score, and market liquidity. Enter the exact quoted post-point rate if available.

How do points affect APR disclosures?

Points increase the APR because they are prepaid interest. This calculator focuses on monthly cash flow and ROI; review your Loan Estimate for APR comparisons.

Should I consider opportunity cost of cash?

Yes—if the cash used for points could earn a higher return (or pay down other debt), compare that yield to the ROI percentage reported here.

Additional Information

  • One discount point costs 1% of the loan amount and typically lowers the note rate by roughly 0.25 percentage points, but quotes vary by lender.
  • Breakeven compares upfront cost to monthly savings—if you expect to sell or refinance before breakeven, points usually fail to pay off.
  • Factor in tax deductibility, lender credits, and closing costs to capture the full cash impact of buying points.
  • Recalculate when rates shift: a lower market rate may outperform buying points, while rate hikes can make prepaid interest more attractive.

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