Formula
Refinance break-even formula
Break-even months = closing costs / monthly savingsThe new payment is an amortized principal-and-interest estimate. A positive monthly savings is required for a break-even month.
Money Calculators
Refinance Calculator
Use this refinance calculator to compare a current payment with a new estimated payment and see how long closing costs may take to break even.
Reviewed May 25, 2026EstimateFormula shown
Live calculator
Refinance estimate
New monthly payment$1,750.72
Principal and interest estimate for the new loan.
Monthly savings$449.28
Current payment compared with the new estimated payment.
Break-even point14 months
Closing costs entered: $6,000.00.
How to read the break-even point
The new payment is $1,750.72. After $6,000.00 in closing costs, the refinance needs 14 months to break even.
Refinance comparison
Payment, cost, and interest assumptions for the new loan.
| Measure | Estimate |
|---|---|
| Current payment | $2,200.00 |
| New payment | $1,750.72 |
| Monthly savings | $449.28 |
| Closing costs | $6,000.00 |
| New term | 360 months |
| New loan interest | $330,258.68 |
Break-even checkpoints
Net savings after closing costs at common holding periods.
| Point | Net savings |
|---|---|
| 12 months | -$608.62 |
| 24 months | $4,782.75 |
| 36 months | $10,174.13 |
| 60 months | $20,956.89 |
How to use
Steps
- Enter the current loan balance.
- Enter current monthly payment.
- Enter new rate, term, and closing costs.
- Compare monthly savings with the break-even point.
Example
Sample calculation
Loan balance$300,000
Current payment$2,200
New rate and term5.75% for 30 years
New payment$1,750.72
Break-even14 months
Calculator use
Best for
- Quick refinance break-even from loan balance, current payment and new rate.
- Personal finance scenarios before changing a budget, loan, savings goal, or purchase plan.
- Monthly cash flow, affordability, debt payoff, or future-value estimates.
- Assumption checks before talking with a lender, tax preparer, employer, or financial professional.
Before relying on it
Check first
- Entering loan balance, current payment and new rate from different time periods or scenarios.
- Mixing gross income, take-home income, one-time costs, and monthly costs in the same comparison.
- Forgetting taxes, fees, insurance, irregular bills, or minimum payments when using an estimate.
- Treating a planning estimate as a quote, tax filing result, approval decision, or guaranteed return.
Benchmarks
How to read the result
The calculator is a decision aid, not a fixed rule. Use the output to compare scenarios and document your assumptions.
No savingsNo break-even
If the new payment is higher, closing costs may not be recovered through monthly savings.
Under 24 monthsShort break-even
Often easier to justify if you expect to keep the loan long enough.
Long break-evenCheck plans
A long break-even can be risky if you may sell, move, or refinance again soon.
Calculator accuracy
Methodology and assumptions
The formula, inputs, example, and limitations are shown so the result is checkable, not just a number in a box.
Formula
Break-even months = closing costs / monthly savings
Inputs used
Loan balance, Current payment, New rate, New term years, Closing costs
Limitations
Results are estimates for quick planning and should be checked before important financial, legal, tax, health, or business decisions.
Last reviewed
May 25, 2026
Cite this page
Toolkit Shelf. Refinance Calculator. Retrieved May 25, 2026, from https://toolkitshelf.com/tools/refinance-calculator
FAQ
Common questions
How do I calculate refinance break-even?
Divide closing costs by monthly savings. The result is the number of months needed to recover the closing costs.
Does this include taxes and insurance?
No. It compares principal-and-interest payments only unless those costs are already included in the payment you enter.
Can refinancing still make sense with a higher payment?
Sometimes, such as when shortening the term or changing loan type, but this calculator focuses on monthly savings and break-even.
What should I compare besides break-even?
Compare the new term, total interest, closing costs, and how long you expect to keep the loan. A lower payment can still extend debt.