Discount Points Calculator
Calculate how much you can save by purchasing discount points on a mortgage. Enter loan amount, number of points, and point cost to see upfront cost and monthly savings.
Published by:
isCalculator Editorial Team
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How to use this tool?
How to Use the Discount Points Calculator
- Enter Loan Amount ($) — Input the total mortgage amount (e.g., 300000 for $300,000).
- Enter Number of Points — The discount points you want to buy (e.g., 2).
- Enter Cost per Point (%) — The cost of each point as a percentage of the loan (default is 1%).
- Enter Monthly Payment Reduction per Point ($) — How much each point reduces your monthly payment (e.g., 50).
- Click Calculate to see:
- Upfront Cost — Total cost to buy the points.
- Monthly Savings — Total monthly payment reduction.
- Break-Even Period — Months to recover the upfront cost via savings.
All inputs must be positive numbers. Use decimals for partial points (e.g., 1.5).
Previous Results
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Frequently Asked Questions
Discount points are prepaid interest on a mortgage. Each point typically costs 1% of the loan amount and reduces your interest rate, lowering monthly payments.
Divide the total upfront cost of the points by the monthly savings. The result is the number of months to recoup the cost.
In many cases, discount points are tax-deductible as mortgage interest. Consult a tax professional for specific advice.
