Mortgage Points Calculator

This mortgage points calculator can be used for comparison of loans that have no points against loans where you pay points. The calculator can also show you how much paying points will reduce your monthly mortgage payments.

What are mortgage points or discount points?

Points, a.k.a. discount points, are fees that you pay when you start a loan in order to reduce the interest rate. Although certain lenders use "points" to mean all the fees you have to pay to close a loan, mortgage points specifically refer to the percentage you will pay your lender in order to enjoy a lower rate of interest.

A single mortgage point (or just "a point") is equal to 1% of the amount you borrow. For example, if you're borrowing $100,000, 1% of that, one point, equals $1000. There are wide variations in the amount of rate discount you can buy with the point, but it's generally between 0.125% and 0.25%.

It's possible to buy several points, fractions of a point, or even a negative point. The amount you can purchase is dependent on your loan company and on how much you're borrowing. Some loan companies allow borrowers to buy up to four points, while others may set a limit at two or even one. It's something you should consider when you are shopping around for a mortgage and making comparisons.

If you want to you can pay cash down for discount points, but they are frequently incorporated into a loan, so you'll start off owing a bit more money, but you will be paying less per month because of the lower rate the points have bought you.

You may also be interested in our HELOC Calculator or Mortgage Overpayment Calculator