Mortgage Discount Points Calculator

Points cost 1% of loan per point and lower rate 0.125–0.375% — break-even drives the buy decision.

Loan amount

Base rate %

Points paid

Rate drop per point

Term years

Break-even

5 yr 1 mo

Points cost

$8,000

Monthly payment savings

$132

How the math works

Points cost = loan × points/100. Break-even = points cost / monthly savings.

$400k × 2 pts = $8k. Rate 6.75 → 6.25%: $2,594 → $2,463 = $131/mo savings. $8k / $131 = 61 mo.

How to Use

Enter loan amount.
Enter base rate %.
Enter points paid.
Enter rate drop per point.
Enter term years.
Read break-even.

Frequently Asked Questions

Points buying decision?

1 point = 1% of loan amount paid upfront, drops rate 0.125–0.375% (typically 0.25%). Best when: long-term hold (>7 years), rate environment unlikely to drop, taxable savings (points deductible on first home, amortized on refi). Worst: short hold, expecting rate drop, refinancing within 2 years. Conventional, FHA, VA all allow points. Cash to close vs lower payment trade. Compare break-even months to expected hold months.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.