Free ToolBreak-Even Analysis2026

Mortgage Refinance Calculator 2026

Compare your current loan to a new one — see your monthly savings, exact break-even point, and total interest saved over the life of the loan. Free, no sign-up.

Monthly savings
Break-even months
Total interest saved
New payment

How it works

1

Enter your current loan

Remaining balance, current interest rate, and years left on your mortgage.

2

Enter new loan terms

The new interest rate, loan term, and closing costs (typically 1–2% of loan amount).

3

See your break-even & savings

Instant monthly savings, break-even month count, and total interest saved over the loan.

Monthly savings
$235
per month after refinancing
7.5% → 6.5% (−1%)Break-even: 26 mo
Payment comparison$2,447 → $2,212
New paymentCurrent payment
Current payment
$2,447
/mo
New payment
$2,212
/mo
Total interest saved
$84,605
lifetime
Break-even
26 mo
(2.2 yr)
Loan Details
CCurrent Loan

Years left on your current mortgage

NNew Loan

Typically 1–2% of loan amount

Rate drop: 1%— typically worth analyzing ✓

Refinance Break-Even Reference

Rate Drop Rule of Thumb
Refinance when your new rate is at least 0.75%–1% lower. On a $300,000 loan, a 1% drop saves roughly $195/month (based on Jan 2026 rates). With $5,000 in closing costs, that's a 26-month break-even. A 0.5% drop saves ~$100/month — break-even stretches to 50 months.
Shorter Term Trade-Off
Refinancing into a 15-year term raises your monthly payment but dramatically reduces total interest. Refinancing into a new 30-year resets your payoff clock even if the payment drops. Use the calculator to compare both scenarios for your loan.
Break-Even Months by Monthly Savings & Closing Costs
How many months to recoup $4,000–$6,000 in closing costs. Based on typical 30-year fixed refinance costs.
Monthly savings$4,000 costs$5,000 costs$6,000 costs
$10040 mo50 mo60 mo
$15027 mo34 mo40 mo
$20020 mo25 mo30 mo
$30014 mo17 mo20 mo
$40010 mo13 mo15 mo
$5008 mo10 mo12 mo

Rule of thumb: Only refinance if you plan to stay in the home past your break-even date.

When does refinancing make sense?

Refinancing can lower your payment, shorten your term, or both. It makes financial sense when: (1) rates have dropped at least 0.75–1% below your current rate, (2) you plan to stay in the home past the break-even point, and (3) you can qualify for the new loan. Use our mortgage affordability calculator to see your home-buying range, or the DTI calculator to check your debt-to-income before applying.

Common Questions About Mortgage Refinancing

What is the break-even point and why does it matter?
The break-even point is the number of months until your monthly savings equal your closing costs. If you pay $5,000 in closing costs and save $250/month, you break even at 20 months. Only refinance if you plan to stay past this point — otherwise you lose money. Use the calculator above for your exact break-even.
How much lower should my new rate be?
A common rule is at least 0.75%–1% lower. On a $300,000 loan, a 1% drop saves roughly $195/month (based on 2026 rate levels). With $4,000–$6,000 in closing costs, break-even is often 21–31 months. A 0.5% drop saves ~$100/month — break-even is roughly 50 months, which usually isn't worth it unless you're certain you'll stay.
What closing costs can I expect?
Refinance closing costs typically run 1–2% of the loan amount. On a $400,000 loan, expect $4,000–$8,000. Line items include: appraisal ($400–600), title search and insurance ($500–2,000), origination/lender fees (0–1%), credit report, and prepaid escrow. Some lenders offer no-closing-cost refis by rolling fees into a higher rate.
Does refinancing extend or shorten my payoff?
It depends on the new term. If you had 20 years left and refinance into a 30-year loan, you're extending payoff by 10 years — even if the payment drops. To shorten your timeline, choose a 15-year or 20-year term. You'll pay more monthly but save significantly on total interest.
When should I avoid refinancing?
Avoid refinancing if: (1) you're moving within the break-even period, (2) the rate drop is under 0.5% with high closing costs, (3) your credit has worsened and you'd get a worse rate, or (4) you're near the end of the loan — most remaining payment is principal, so rate savings are minimal.
What is a no-closing-cost refinance?
A no-closing-cost refi rolls fees into the loan balance or a slightly higher interest rate rather than charging upfront. You'll pay no out-of-pocket at closing, but you'll pay more over the life of the loan. Use the calculator to compare both options — the right choice depends on how long you'll stay.
Who should refinance in 2026 — and the 70% who shouldn't bother
Freddie Mac PMMS May 28, 2026 · RefiGuide.org · amortio.com

With the 30-year fixed at 6.53% (Freddie Mac, May 28, 2026), refinancing math only works for a narrow slice of homeowners. The key question: what rate do you have now?

✓ Strong candidates

2023–2024 buyers at 7%+

Rate gap of 0.5–1.5% produces real savings. Run the break-even above.

✓ Strong candidates

ARM resetting soon

Fixing an adjustable rate to 6.5% before it resets to 8%+ is defensible even if savings are modest.

✗ Don't refinance

2020–2022 buyers at 3–4%

~70–75% of mortgage holders. Refinancing today increases your rate, payment, and lifetime interest cost.

Current rate → 6.5%Monthly savings ($350K)Break-even at $6K costs10-yr net savings
7.5% → 6.5%~$209/mo~29 mo~$18,600
7.0% → 6.5%~$104/mo~63 mo~$6,000
8.0% → 6.5%~$316/mo~19 mo~$31,900

Rate forecasts suggest possible movement toward high-5%/low-6% by late 2026 — if your rate is 7.25%+ and you plan to stay 3+ years, the break-even math works now. If you're borderline (7–7.25%), waiting for a 6% handle may improve your numbers further. Sources: Freddie Mac PMMS May 28, 2026; RefiGuide.org; FreeToolPark 2026; amortio.com.

FHA Streamline & VA IRRRL: faster, cheaper refinancing with no appraisal for eligible borrowers
VA Circular 26-18-13 · HUD FHA Mortgagee Letter · wisemoneylife.com 2026

If your existing mortgage is FHA or VA-backed, you may qualify for a streamline refinance — a dramatically simplified process with no full appraisal, minimal income verification, and often much lower upfront costs than a conventional refi.

FeatureFHA StreamlineVA IRRRL
EligibilityExisting FHA loan onlyExisting VA loan only
Appraisal required?No (most cases)No
Income verification?Often waivedNot required
Credit check?LenientNo minimum credit score (VA)
Upfront fee1.75% UFMIP0.5% funding fee (vs 2.15–3.3% on purchase)
Net tangible benefit5%+ reduction in rate+MIP, or ARM→fixed0.5% rate reduction (fixed→fixed); all costs recouped ≤36 mo
Loan seasoning210 days + 6 payments210 days + 6 payments
Typical rate vs. conventionalMarket FHA rateOften 0.25–0.5% below conventional

Key advantages vs. conventional refi

• No appraisal: saves $400–$600 and eliminates risk of low valuation killing the deal

• VA IRRRL: veterans can often bring $0 to closing by rolling the 0.5% funding fee and other costs into the loan balance

• Faster closing: typically 2–4 weeks vs. 30–60 days for conventional refis

• FHA MIP note: FHA loans closed after June 2013 with less than 10% down carry MIP for the life of the loan — streamline refi does NOT remove MIP; only switching to conventional (once you have 20% equity) does

Cash-out refinance vs. HELOC in 2026: why the rate environment makes HELOC the better choice for most
CBS News 2026 · TheMortgageReports.com · Federal Reserve H.15 May 2026

The most common refinance mistake in 2026: homeowners with a 3–4% mortgage doing a cash-out refinance to tap equity — and replacing their entire low-rate first mortgage with a 6.5–7% loan. A HELOC leaves your existing rate intact.

Example: Need $50K, have $300K at 3.5%

Cash-out refi (bad choice here)

New loan: $350K at 6.75%

New P&I: ~$2,270/mo

Old P&I was: ~$1,347/mo

Extra cost: +$923/mo

Rate applied to all $350K

HELOC (better choice here)

Keep $300K at 3.5% (unchanged)

HELOC: $50K at ~8.5% variable

HELOC interest-only: ~$354/mo

Extra cost: +$354/mo

Rate only on the new $50K

FeatureCash-out RefiHELOC
Affects first mortgage?Yes — replaces it entirelyNo — leaves it intact
Rate (2026 typical)6.5–7.5% (first lien)7.25–9.25% (prime + margin)
Rate applied toFull new balanceOnly what you draw
Rate typeUsually fixedVariable (tied to prime)
Closing costs2–3% of full loan amountOften lower or waived
Best forReplacing a 7%+ rate AND needing cashPreserving a sub-5% rate; phased expenses

Prime rate as of May 2026: 6.75% (Federal Reserve H.15). Most HELOCs: prime + 0.5% to 2.5% = 7.25–9.25%. Cash-out makes sense if your current rate is already 7%+ (you're replacing a high rate anyway) or if you need a very large lump sum (>$150K). For most 2020–2022 buyers with sub-4% rates, a HELOC is significantly cheaper for accessing equity. Sources: CBS News 2026; TheMortgageReports.com; Investormint 2026; Federal Reserve H.15 May 2026.

Frequently Asked Questions
Common questions about mortgage refinancing, break-even, and closing costs.

Refinance when rates are at least 0.75–1% lower than your current rate and you plan to stay in the home long enough to recoup closing costs. If break-even is 24 months and you're moving in 18 months, refinancing usually doesn't pay off.

Closing costs typically run 1–2% of the loan amount. On a $300,000 loan, expect $3,000–$6,000. They include appraisal, title insurance, origination fees, and prepaid items like escrow. Some lenders offer no-closing-cost refis by rolling fees into a slightly higher rate.

Usually not. On a $300K loan, 0.5% saves ~$100/month at current (2026) rate levels. With $5,000 in closing costs, break-even is ~50 months. If you're certain you'll stay that long, it can work — run the calculator with your exact numbers.

Break-even is the number of months until your monthly savings equal your closing costs. If closing costs are $5,000 and you save $200/month, break-even is 25 months. Only refinance if you expect to stay past that point.

Yes. Refinancing replaces your old loan with a new one, so you start a fresh term. If you had 20 years left and refinance into a 30-year loan, you're extending your payoff by 10 years. Consider a shorter term (15 or 20 years) if you want to pay off sooner.

It depends. Lenders require a minimum credit score (often 620+ for conventional loans). FHA and VA streamline refinances are more lenient. If your score dropped since purchase, you may get a worse rate — compare multiple offers before applying.

The primary candidates are homeowners who bought at 7%+ in 2023–2024. At today's 6.53% (Freddie Mac May 28, 2026), moving from 7.5% → 6.5% on a $350K loan saves ~$209/month, breaking even at $6,000 costs in ~29 months. The 70–75% who locked 3–4% in 2020–2022 should not refinance for rate reduction — they'd increase their payment. ARM holders whose fixed period is expiring are also strong candidates. Sources: RefiGuide.org 2026; Freddie Mac PMMS May 28, 2026.

FHA Streamline and VA IRRRL are simplified refinances for existing FHA/VA loan holders. No full appraisal required, limited income verification. FHA requires 'net tangible benefit' (5%+ combined rate+MIP reduction) and 210-day loan seasoning. VA IRRRL requires 0.5% rate reduction; only a 0.5% funding fee (vs. 2.15–3.3% on purchases); all costs recouped within 36 months. VA IRRRL rates often run 0.25–0.5% below conventional. Sources: VA Circular 26-18-13; wisemoneylife.com 2026.

For most homeowners with sub-5% rates, a HELOC is better. A cash-out refi replaces your entire mortgage at today's 6.5–7% — you pay that rate on your full balance, not just the cash. A HELOC leaves your low first-mortgage rate intact and only charges the higher rate on what you actually borrow. With prime at 6.75% (May 2026), HELOC rates run 7.25–9.25% but only on new money. Cash-out makes sense if your current rate is already 7%+. Sources: CBS News 2026; TheMortgageReports 2026; Federal Reserve H.15 May 2026.
Sources & references
Lending guidelines and rate references. We are not affiliated with any lender.

Results are estimates only. Consult a licensed lender for qualification. Rates and guidelines may change.

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Last updated: 2026-01-25 · Break-even calculation assumes fixed monthly savings · For estimation only; consult a lender for qualification.