Pay Points on Mortgage Calculator

Alerts and notices

This calculator helps determine if reducing the mortgage interest rate by paying points is the best option. Generally, if the borrower will have the mortgage for a short period of time, points are not advisable. However, if the borrower plans to have the mortgage for a longer period of time, the points will pay for themselves and more. The key to deciding whether or not to pay points is whether the borrower will have the mortgage for a shorter or longer period of time than is indicated in the Years to recover cost of points field.


  • The amount in the Loan amount field in the No Points column is computed by taking the amount in the Loan amount field in the Points column and subtracting the amount in the Points amount field. This produces two loans with the same proceeds after points amount.
  • For loans of different amounts, see Mortgage Comparison calculator.


A borrower is taking out a mortgage loan for $250,000 at 7.50%, but is offered the option of paying 2 points and reducing the interest rate to 7.00%. Should he opt to pay the points?

Field Input
Points No Points
Loan amount $250,000
Points 2
Loan term in years 30
Annual interest rate 7.00% 7.50%

In this example, it would take 5.58 years to recover the cost of the points.

Note: Points are recovered when all previous payments plus the current balance are equal between the two mortgages.

Amounts after 5.58 years

Points No Points
Payments paid $111,438 $114,776
Mortgage balance $233,259 $229,928
Total amount paid $344,697 $344,704

Copying and pasting loan payment schedules into Microsoft Excel or other applications

View this procedure to find out how you can copy loan payment schedules from this calculator to the application clipboard, and then paste them into Microsoft Excel or other applications.

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