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Calculate the Impact of Discount Points

Buying discount points (or mortgage points) means paying extra cash at the time of closing to reduce the interest rate and monthly payments. Another option would be to use that money towards a larger down payments, reducing the loan amount. Which option makes the most sense? Use this calculator to find out how long it will take to recuperate the cost for buying points called the breakeven.

$

Enter the total amount of the loan. This would be the original amount, before any payments to the principal.

%

Enter the annual interest rate as a percentage. This is the rate you receive before buying discount points.

Choose the length of the loan term you plan to use.

%

Choose the number of points to buy. One (1) discount point costs 1% of the loan amount. This calculator is based on 1 discount point reducing the interest rate by 0.25%, please note this will vary based on the product and loan characteristics.

%

Enter the annual interest rate for this mortgage with discount points as a percentage.

CALCULATE
2 points will require a payment of

$2,300

You would break even in

105 months

If you plan to move or refinance sooner than the breakeven date, you should consider putting this money towards a larger down payment.

Monthly payment with points:
$870
Monthly payment without points:
$908

These calculations are tools for learning more about the mortgage process and are for educational/estimation purposes only. Calculator results are rounded down to the nearest dollar. Payment shown does not include taxes, insurance, or mortgage insurance (if applicable). This does not constitute an offer or approval of credit. Contact a PrimeLending home loan officer for actual estimates.

For example, a conventional fixed rate loan, with a loan term of 360 months, loan amount of $572,000, 7.125% interest rate at cost of .051 points ($291.72) paid at closing by borrower, annual percentage rate of 7.178%, down payment of 20%, and a credit score of 740+ with a monthly payment of $3,853.67. Rates pulled 12/5/24, rates subject to change. Loans are subject to borrower qualifications, including income, property evaluation, and final credit approval. Payment shown is principal and interest and does not include amounts for taxes and insurance premiums (if applicable). The actual payment obligation will be greater.

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