Mortgage Points Deduction Amortization 2027 Calculator
Calculate the 2027 federal tax deduction for mortgage discount points — immediate vs amortized over the life of the loan.
What Are Mortgage Points?
Discount points are upfront fees you pay at closing to lower your mortgage interest rate. One point = 1% of the loan amount and typically reduces the rate by 0.25%. For a $400K loan, 2 points = $8,000 upfront, lowering a 7% rate to ~6.5%. Points paid at origination are 'prepaid interest' — deductible on Schedule A (if itemizing). Source: IRC §461(g), IRS Pub. 936. Last updated: May 2026.
Immediate Deduction Rules (Purchase Loan)
Points on a primary-home PURCHASE loan can be deducted in FULL in the year paid IF: (1) loan is for buying or improving primary residence, (2) paying points is established business practice in your area, (3) points are calculated as a percentage of principal, (4) closing statement shows points clearly, (5) you paid them with your own funds (not seller-paid concessions). All five must be met.
Amortization Required (Refinance / Second Home)
For REFINANCE loans, second homes, and rental properties, points MUST be deducted ratably over the life of the loan. $8,000 on a 30-year refinance = $267/year ($8K ÷ 30) deductible for 30 years. If you sell or refinance again before 30 years, you can deduct the UNAMORTIZED balance in that year (catch-up deduction).
When Is It Worth Paying Points?
Compute the break-even: divide upfront points cost by monthly payment savings = months to recoup. If you plan to stay in the home/loan longer than break-even, paying points wins. Tax deduction further reduces effective break-even. For a $8K points cost saving $80/month (after tax @24% = $61/month), break-even = 131 months = 10.9 years. Stay >11 years → win.
Frequently Asked Questions
Can I deduct mortgage points all at once in 2027?
Only if you meet ALL of: (1) primary home PURCHASE loan (not refinance), (2) points are stated as percentage of principal on closing statement, (3) charging points is standard practice in your area, (4) you paid them with your own funds. Otherwise, amortize over loan life.
How do I deduct refinance points?
Amortize equally over the life of the loan. $6,000 of points on a 30-year refinance = $200/year deduction on Schedule A for 30 years. If you sell the home, pay off the loan, or refinance AGAIN before 30 years, you can deduct ALL remaining unamortized points in the year that happens.
What if the seller paid the points for me?
Seller-paid points are ALSO deductible by YOU (the buyer) per IRS rules \u2014 but you must REDUCE your home's basis by the amount of seller-paid points. The deduction is the same as if you paid them yourself, but the basis reduction means you have a larger gain on eventual sale. Track carefully on Form 8949.
Are mortgage points deductible if I take the standard deduction?
No. Points are itemized on Schedule A. If your total itemized deductions are less than the 2027 standard deduction (~$15,750 single / $31,500 MFJ), taking the standard deduction wins \u2014 making points effectively non-deductible. Many borrowers in low-tax states no longer itemize.
Can I deduct points on a HELOC or home equity loan?
Only if the loan was used to BUY, BUILD, or substantially IMPROVE the home that secures the loan (post-TCJA / OBBB rules). HELOCs used for personal expenses, debt consolidation, or non-home expenses have non-deductible points (and the underlying interest is also non-deductible).
What's the 2027 home mortgage interest deduction cap?
Interest deductible on up to $750,000 of acquisition debt (post-12/15/2017 loans) per IRS Pub 936 and OBBB. The pre-TCJA $1 million limit still applies to loans originated before December 15, 2017 (grandfathered). Points are subject to the same loan limits as the underlying interest.