Mortgage Points Break Even 2026 Calculator
Compare a rate with discount points vs a no-points loan. This 2026 calculator shows how many months it takes for monthly savings to recoup the upfront point cost, and the lifetime interest impact over 30 years.
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| Payment with points | — |
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| Break-even point | — |
| Total interest (no points) | — |
| Total interest (with points) | — |
| Lifetime savings (after point cost) | — |
Discount points are upfront fees you pay your lender to lower the mortgage rate. One point typically costs 1% of the loan amount and reduces the rate by 0.125 to 0.25 percentage points. The break-even point is the number of months you must keep the loan for monthly payment savings to recoup the upfront point cost. Last updated May 2026.
How Discount Points Math Works in 2026
If you pay $8,000 in points on a $400,000 loan to drop the rate from 6.875% to 6.375%, your monthly payment falls by roughly $130. Break-even is $8,000 / $130 = about 62 months (5.2 years). Stay in the loan longer and points were profitable; refinance or sell sooner and you lose money. The CFPB notes break-even sensitivity is the single most important variable in deciding whether to buy points.
When Buying Points Pays Off
Points make sense when you are certain you will hold the loan past break-even, when you have extra cash beyond your down payment that would otherwise sit in low-yield accounts, and when you can deduct points as mortgage interest on Schedule A (subject to limits — see IRS Publication 936). Refinance points are deducted over the life of the loan, not upfront — a frequent surprise at tax time.
When to Skip Points
Avoid points if you may relocate within 5 years, if rates are expected to fall (creating a refi opportunity that wipes out your investment), or if the cash is better deployed as a larger down payment to remove PMI. A no-points loan with lender credits is often better for buyers planning to move in 3-5 years — the lender pays your closing costs in exchange for a slightly higher rate.
Common Mistakes Buying Points
(1) Ignoring opportunity cost — that $8,000 invested at 7% S&P returns instead of buried in points could grow to $15,700 in 10 years. (2) Forgetting the refi reset — if you refinance in year 3, all unused point savings vanish. (3) Confusing origination points with discount points — origination is the lender's fee and doesn't reduce your rate. Only discount points buy down the rate. (4) Skipping the break-even test — always compare to your expected hold period before paying points.
Sources: CFPB, IRS Publication 936, Freddie Mac PMMS. Always confirm point pricing on your Loan Estimate.