Mortgage Discount-Point Break-Even
Monthly payment with and without points, monthly savings, total point cost, and the break-even month.
Example
You enter
- Loan amount ($) 300000
- Base rate, no points (percent) 7
- Rate with points (percent) 6.5
- Total point cost (percent of loan) 2
- Term (years) 30
- Expected holding period (years) 7
You get
- Monthly savings $99.70 / mo
- Total point cost $6000
- Break-even 60.178
Details, formula, and sources
Verdict vs your holding period.
Monthly payment at each rate = (P * r) / (1 - (1 + r)^-n), r = rate/12, n = term months. monthly_savings = payment_base - payment_points. point_cost = loan * point_cost_pct/100. break_even_months = point_cost / monthly_savings. Verdict compares holding period (months) to break-even.
First-principles amortization. Discount points and their cost are disclosed on the CFPB Loan Estimate and Closing Disclosure (12 CFR 1026.37-38).
CFPB Loan Estimate / Closing Disclosure forms free at consumerfinance.gov. The amortization formula is universal.
Estimate. Lender governs final underwriting and rate / fee disclosure. Appraiser governs the appraised value. State law and the agency's program guidelines may impose stricter limits than the published thresholds.
Field names used by the API: loan_amount, base_rate_pct, points_rate_pct, point_cost_pct, term_years, holding_years, monthly_savings, point_cost, break_even_months
- Amortization fully amortizing fixed-rate loan at each rateconvention
- Break-even basis undiscounted cumulative payment savings vs up-front costcommon-practice screen