$8,000
The bet
You get the $8,000 back in 5 yr 2 mo. Over your stated 7-year hold you are ahead by $6,033, counting the balance still owed. Move house or refinance before 5 yr 2 mo and the points were wasted.
- Cost of the points
- $8,000
- Rate without points
- 6.500%
- Rate with points
- 6.000%
- Payment without
- $2,528.27
- Payment with
- $2,398.20
- Monthly saving
- $130.07
- Break-even
- 5 yr 2 mo
- Net position after 7 years
- $6,033
What this is doing
- The median American mortgage does not survive to its break-even, because people move and refinance. Be honest about your own horizon before paying points.
- A seller-paid or lender-paid buy-down is a different arrangement and this page does not model it. So is a temporary 2-1 buy-down, which only lowers the rate for the first two years.
- Every figure here is illustrative. It is generated from the numbers you typed using published rules, and it is not a rate quote, a pre-qualification, or an offer of credit.
The rule this page applies
A point costs 1% of the loan amount. What it buys in rate is set by the lender and varies daily, so it is an input here rather than a constant. The break-even is the cost divided by the monthly saving; the fuller answer also counts the balance still owed, because a lower rate amortises faster.
Source: Standard buy-down arithmetic
Questions people ask about this one
Is a quarter point per point realistic?
It is a common rule of thumb and nothing more. The real figure moves daily and differs by lender, credit profile and loan size. Ask for the actual pricing and type it in.
Are points tax deductible?
Points on a purchase of a primary residence may be deductible in the year paid, and on a refinance are generally spread over the loan term. That depends on your circumstances and this calculator does not model tax.
What about a lender credit?
It is the same arithmetic with the sign flipped: you take a higher rate and are paid for it. Enter negative points if you want to see it, and watch the break-even become the point where the credit stops being worth the higher rate.
The rest of the bench
Monthly payment
Principal, interest, taxes, insurance, mortgage insurance and HOA — drawn as five separate threads, not folded into one number.
Amortisation
The full schedule, switchable month-wise and year-wise, with a running total and the crossover month called out.
Affordability
Income, debts and cash in, a defensible price out — and a plain statement of which of the three constraints is the one actually holding the number down.
Refinance
Costs divided by monthly saving is the answer most sites give, and it ignores the fact that a new 30-year term restarts the clock. Both numbers are shown here.
Extra payment
A recurring extra, a one-off lump sum, or both — against the interest they remove and the months they take off the end.
Rent vs buy
Both households start with the same cash. Whichever is cheaper in a given month invests the difference; whichever is dearer draws it down. That symmetry is the whole argument.
FHA MIP
The upfront premium, the annual premium, and the part almost every calculator gets wrong: whether it ever comes off.
VA purchase
The VA funding fee changes with the down payment and with whether it is your first use of the entitlement. Exempt borrowers pay none of it.
VA refinance
An IRRRL carries a 0.50% funding fee; a VA cash-out carries 2.15% or 3.30%. Both are shown against a true break-even.
HELOC
Interest-only while you draw, then a fully amortising payment that can be several times larger. Both are shown, because the second one is the surprise.
DSCR
Debt-service coverage divides the rent the property brings in by what the property costs to carry. Most lenders want 1.20 or better.
Fix & flip
Acquisition, rehab, points, interest, holding costs and selling costs against the after-repair value — with the cash you actually have to put in.