Mortgage Points Breakeven: $400K Loan at 8%, 1 Point
Calculate how long it takes to recoup the cost of 1 discount point on a $400,000 mortgage at a high 8% rate.
How to use this tool
- Enter the loan amount, the rate without points, and the term.
- Enter how many points you would buy and how much each lowers your rate.
- Read the upfront cost, your new rate and monthly savings, and the breakeven month.
- Buy points only if you expect to keep the loan past the breakeven point.
Find the breakeven timeline for buying down a high 8% mortgage rate by 1 point on a $400,000 loan.
Frequently asked questions
- What is a mortgage discount point?
- One point costs 1% of the loan amount and lowers your interest rate, usually by about 0.25 percentage points. You pay it at closing in exchange for a smaller monthly payment.
- How do I know if buying points is worth it?
- Compare the breakeven month to how long you plan to keep the loan. If you will keep it well past breakeven, the cumulative payment savings exceed the cost and points pay off.
- Are mortgage points tax deductible?
- Points on a primary-residence purchase may be deductible, sometimes in the year paid and sometimes over the life of the loan. Rules vary, so consult the IRS or a tax professional.