Refinance Break-Even Calculator
The calculator answers one question: how many months of lower payments it takes to earn back what a refinance costs, and whether that still holds once a reset loan term is counted. A refinance is secured by your home, so if you cannot repay the new loan you could lose your home. It reports arithmetic on the numbers you enter; it never says whether you will qualify, what rate you will get, or that you will come out ahead.
Partner disclosure. Loans Generator may be paid through an affiliate network when you click or submit a request through the offer link on this page. This does not change what we report.
Find your break-even month
A refinance is secured by your home, so if you cannot repay the new loan you could lose your home. Example values: replace with yours. The new rate is left blank: no rate is filled in from any lender or average. Results update as you type. This calculator runs in your browser and does not send the numbers you enter.
From your latest mortgage statement.
Fixed rate only.
From your statement, in whole months.
Leave blank to use the payment computed from the three fields above. A payment you enter drives the current-loan schedule. Escrowed taxes, homeowners insurance and mortgage insurance are excluded from both payments.
Enter the rate on your Loan Estimate.
Total of lender fees, third-party fees and points. The CFPB says: Lenders offering "no closing cost" loans do it either "by charging you a higher interest rate and giving you a credit" or "by adding the closing costs to your loan amount."
From 1 to the new term.
New money you take out, if any.
Your break-even
This calculator needs JavaScript. The formulas and the worked example on this page show the same math.
- Taking cash out? Cash-out vs rate-and-term refinance
- Weighing a line of credit instead? HELOC vs cash-out refinance
What this calculator leaves out
Escrowed taxes, homeowners insurance and mortgage insurance are excluded from both payments.
Mortgage insurance is not included. Removing or adding mortgage insurance can change the real savings.
IRS Publication 936 says points paid to refinance "generally" are not deductible in full in the year you pay them; they are deducted over the life of the loan. This calculator does not compute tax effects.
Disclaimer
This calculator shows arithmetic on the numbers you enter. It is not a loan offer, a rate quote or an approval. Your actual rate, costs and payments are on your Loan Estimate. A refinance is secured by your home; if you cannot repay, you could lose your home. Under Regulation Z you generally have until midnight of the third business day (Saturdays count as business days for this purpose) to cancel a refinance of your principal dwelling. If the lender that originally made your current loan refinances it, only new money is rescindable; with any other lender, including one that bought or services your loan, the whole refinance is rescindable.
How this is calculated
- Amounts you enter are rounded to the cent; rates are used as entered. Each loan's monthly payment is balance × r ÷ (1 minus (1 + r) raised to the power of minus n), rounded to the cent, half up. Here r is the yearly interest rate written as a decimal (8% is 0.08) divided by 12, and n is the number of monthly payments: the months remaining for the current loan, and the new term for the new loan. At 0% the payment is the balance ÷ n, rounded to the cent.
- If you leave the current payment box blank, or enter the same amount as that result, the result is used. A different payment you enter is used instead, and a note appears when the two differ by more than $1. A different payment is not accepted if it does not cover the first month's interest, or if it would take more than 2,000 months to pay off the loan.
- Each loan is then paid month by month: that month's interest is the balance × r, rounded to the cent, half up, and the rest of the payment reduces the balance. The last payment is the balance left plus that month's interest, made in the first month when that is no more than the regular payment; with the formula payment it is made in month n if not sooner. So the last payment can differ from the others, and the months to payoff are the number of payments made.
- The new loan's balance is your current balance, plus the closing costs if they are added to the loan, plus any cash out (a blank cash-out box counts as $0), and its term is the one you choose or your months remaining. Monthly savings = current payment minus the new loan's regular payment. If the savings are above $0, the payment break-even is closing costs ÷ monthly savings, shown to two decimal places and rounded up to a whole month: the first month in which the savings add up to at least the costs. With $0 in costs there is nothing to recover. If that month comes after either loan's last payment, no break-even month is given, because the savings stop or change once a loan is paid off. Savings of $0 or less mean there is no payment break-even.
- Interest view, over the months you expect to keep the loan: the current loan's interest in those months, minus the new loan's interest in the same months, minus the full closing costs, whether paid in cash or added to the loan. A loan paid off sooner counts its interest up to its payoff. Above $0, interest plus costs on the new loan is lower by that amount; below $0, it is higher; at $0, they are equal. Each loan's balance at the end of those months is shown too.
- If the savings are above $0 but have not added up to the closing costs by the end of the months you keep the loan, the costs still unrecovered are shown: closing costs minus monthly savings × those months. If you keep the loan longer than the current loan would have lasted, the shortfall is given as of the current loan's last payment, and the result says that each later new-loan payment adds to the cost. If the break-even month falls within those months but the interest view is not lower, or the interest view is lower with no break-even month within those months, a note says the two views disagree and that the interest view is the one to go by.
- Total interest to payoff adds up each loan's monthly interest, and for the new loan it is also shown with the closing costs, if any, added. The result says how many months later or earlier the new loan's last payment comes than the current loan's last payment, using the payment you entered if you entered one; if they fall in the same month, nothing is said. If the new term differs from the number of months to the current loan's last payment, the same refinance is also shown over that many months. This comparison is skipped when the current loan's last payment is more than 480 months away, longer than any new term you can choose. When there are closing costs, the other way of paying them, in cash or added to the loan, is shown too, with everything else unchanged. With any cash out above $0, the break-even, the interest view and these comparisons are left out; each loan's payments, total interest and payoff month are still shown. If either loan is adjustable-rate, nothing is calculated.
Example: a $280,000 balance at 8% with 336 months left and no payment entered, refinanced at a hypothetical 7% into a 360-month loan with $6,000 of closing costs paid in cash, kept for 60 months.
| Current loan payments | 335 payments of $2,090.92, final $2,096.04 |
|---|---|
| New loan payments, 360 months | 359 payments of $1,862.85, final $1,859.06 |
| Monthly savings | $228.07 |
| Payment break-even | $6,000 ÷ $228.07 = 26.31, so month 27 |
| Current loan interest, first 60 months | $108,977.76 |
| New loan interest, first 60 months | $95,339.22 |
| Interest view after 60 months | $7,638.54 lower on the new loan |
| Same refinance over 336 months | monthly savings $188.02, break-even month 32 |
Both payments are principal and interest only. Escrowed taxes, homeowners insurance and mortgage insurance are left out, and removing or adding mortgage insurance can change the real savings.
The rule that governs everything else
The most common break-even shortcut, closing costs divided by monthly savings, ignores the term reset. Someone with 28 years left who refinances into a new 30-year loan lowers the payment partly by stretching the debt over two more years. So the tool always shows two answers side by side:
- Payment break-even: the month in which cumulative payment savings first equal or exceed the closing costs.
- Interest view: over the number of months you expect to keep the loan, interest on the new loan plus closing costs, compared with interest on the current loan. Over a full term, it also shows when each loan is paid off.
If the two disagree, the interest view wins and the tool says why.
Worked example
All inputs are hypothetical, not an offer or a quote. For context only, Freddie Mac's survey average for a 30-year fixed-rate mortgage was 7.32% as of October 22, 2026 (an average for purchase loans, not an offer).
Inputs. Current balance $280,000 at 8.00% fixed with 336 months left. New loan: hypothetical 7.00% fixed interest rate, 360-month term; APR about 7.22%, assuming all $6,000 of closing costs are finance charges. Closing costs $6,000 paid in cash. Expected to keep the loan 60 months. Payments are principal and interest only. They do not include taxes and homeowners insurance, so your actual payment will be higher.
| Current loan | New 30-year loan | New loan, same 336-month term | |
|---|---|---|---|
| Every payment | 335 payments of $2,090.92, final $2,096.04 | 359 payments of $1,862.85, final $1,859.06 | 335 payments of $1,902.90, final $1,907.15 |
| Monthly savings | $228.07 | $188.02 | |
| Payment break-even | $6,000 ÷ $228.07 = 26.31, so month 27 | $6,000 ÷ $188.02 = 31.91, so month 32 | |
| Interest in first 60 months | $108,977.76 | $95,339.22 | |
| Balance after 60 months | $263,522.56 | $263,568.22 | |
| Net after 60 months (interest view) | $108,977.76 minus $95,339.22 minus $6,000 = $7,638.54 | ||
| Total remaining interest to payoff | $422,554.24 | $390,622.21 + $6,000 costs = $396,622.21 | $359,378.65 + $6,000 costs = $365,378.65 |
| Paid off in | 336 months | 360 months | 336 months |
The payment view and the interest view agree here, with one small gap: after 60 months, 60 × $228.07 minus $6,000 is $7,684.20, while the interest view gives $7,638.54. The $45.66 difference is the extra balance still owed on the new loan ($263,568.22 against $263,522.56) because its payments are spread over 360 months instead of 336. Over longer horizons that gap grows, which is why the calculator shows both.
Figure: $228.07 a month of payment savings against $6,000 of closing costs paid in cash. Hypothetical rates of 8.00% (current) and 7.00% (new, 30-year fixed).
A published benchmark
When a VA loan is refinanced and the new loan does not exceed the payoff amount, 38 CFR 36.4306 requires that "all of the fees and incurred costs must be scheduled to be recouped on or before the date that is 36 months after the date of loan issuance," calculated "through lower regular monthly payments (other than taxes, amounts held in escrow, and fees...)." That is the same arithmetic as the payment break-even.
Who the refinance link on this page is for
Below the results, the page shows one refinance request link. It goes to a refinance matching offer that looks for homeowners refinancing a loan over $150,000, with a loan-to-value under 90% and good or excellent credit. It does not cover mobile homes, and it is not available for homes in Indiana, Kentucky, New York or Ohio. If your home is in one of those four states, the link is replaced with a link to our home equity guides. Lender rules on credit, equity and seasoning are in cash-out refinance requirements.
Before you apply: a refinance is secured by your home. If you cannot repay, you could lose your home. No lender can promise approval, a rate, or that refinancing will lower your costs. Loans Generator may be paid through an affiliate network when you click or submit a request through the link below; this does not change what we report.
Our link is not offered for homes in Indiana, Kentucky, New York or Ohio. Choose your state to see the link.
Sources
- Consumer Financial Protection Bureau, "Is there such a thing as a no-cost or no-closing cost loan or refinancing?", last reviewed April 3, 2024, accessed October 26, 2026.
- Consumer Financial Protection Bureau, Regulation Z, 12 CFR 1026.2(a)(6) and 12 CFR 1026.23 with official interpretation, accessed October 26, 2026.
- 38 CFR 36.4306, Refinancing of mortgage or other lien indebtedness, via eCFR, accessed October 26, 2026.
- Freddie Mac, Primary Mortgage Market Survey, weekly averages as of October 22, 2026, accessed October 26, 2026.
- Internal Revenue Service, Publication 936 (2025), accessed October 26, 2026.
- Consumer Financial Protection Bureau, “Regulation Z, 12 CFR 1026.23 Right of rescission”
- Freddie Mac, “Primary Mortgage Market Survey, U.S. weekly averages as of 10/22/2026”
- Internal Revenue Service, “Publication 936 (2025), Home Mortgage Interest Deduction”
- Consumer Financial Protection Bureau, “Regulation Z, 12 CFR 1026.2(a)(6) Business day”
Loans Generator is not a lender or mortgage broker. Rates in this page's examples are hypothetical illustrations, not offers. No lender can guarantee approval, a rate, a payment or savings. Rules cited here were checked on October 26, 2026 and change without notice. This page is general information, not legal, tax, or financial advice.