TALLIVOMethodology
How the Discount Points Calculator works
How Tallivo works out whether buying mortgage discount points pays off, and when.
The formula
points cost = loan × points% · simple break-even = cost ÷ monthly saving · true crossover = first month where (payments + points + balance) with points ≤ without
Step by step
- One point costs 1% of the loan amount. Fractional points scale linearly.
- Both monthly payments come from the same amortization engine as the mortgage calculator, so the comparison is internally consistent.
- The SIMPLE break-even is the points cost divided by the monthly payment saving — the figure lenders quote.
- The TRUE crossover walks both loans month by month and finds the first month at which total outlay (payments made so far, plus the points paid, plus the balance still owed) is lower with the points. It arrives EARLIER than the simple figure, because the lower rate also amortizes slightly faster.
- Lifetime interest saved and the net benefit after the cost of the points are both reported for holding to full term.
Assumptions & limitations
- The rate reduction is YOUR INPUT, taken from a loan estimate. There is no fixed points-to-rate ratio — lenders price points daily and differently by loan type — so assuming one would be inventing data.
- No investment return is assumed on the cash spent on points. That would require picking a rate; the page states the trade-off in words instead.
- Tax treatment of points is not modeled. Points on a primary-residence purchase are often deductible in the year paid and on a refinance are usually spread over the loan, with conditions worth asking a professional about.
- 30-year fixed, principal and interest only. Lender credits (negative points) are not modeled.
Sources
Reviewed for 2026; the calculation is rate-driven and refreshes with the benchmark. Figures are planning estimates, not a loan offer — this is not financial advice.
Think one of these figures is wrong? Tell us and we'll check it — we verify against the primary source, not aggregator tables. How we build and check every calculator is documented in our editorial policy.