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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.

By Sammy S. · Founder · AuthorUpdated for 2026

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.

How to use this mortgage refinance calculator

Enter your remaining balance, current rate, and years left. Then enter the new rate, new term, and closing costs. The calculator shows monthly savings, break-even months, and total interest saved so you can decide if refinancing is worth it.

Loan details

Current vs new rate, term, and costs

CCurrent loan

Years left on your current mortgage

NNew loan

Typically 1–2% of loan amount

Rate drop: 1%— typically worth analyzing ✓

Monthly savings

per month after refinancing

7.5% → 6.5% (−1%)Break-even: 26 mo

$235

Payment comparison$2,447 → $2,212

Current payment

$2,447

/mo

New payment

$2,212

/mo

Total interest saved

$84,605

lifetime

Break-even

26 mo

(2.2 yr)

Quick Break-Even Guide
Based on $5,000 closing costs
$150/mo~34 mo ($5k)
$200/mo~25 mo ($5k)
$300/mo~17 mo ($5k)
$400/mo~13 mo ($5k)

Enter your actual numbers above for an exact result.

When to Refinance
✓New rate is at least 0.75–1% lower than your current rate
✓You plan to stay in the home past break-even
✗Avoid if moving before break-even or credit has worsened

No-closing-cost refis roll fees into a slightly higher rate — compare both with the calculator.

Related tools
Mortgage Affordability CalculatorUS Paycheck CalculatorDTI CalculatorNet to Gross Calculator

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.

Divide total closing costs by monthly payment savings. Example: $5,000 costs ÷ $200/month savings = 25 months. Also check lifetime interest: if the new loan resets to 30 years, you might save monthly but pay more interest overall—compare total interest on the remaining current term vs. the new loan. This calculator does both for you.

A 15-year refinance usually raises your monthly payment but cuts total interest dramatically and builds equity faster. It makes sense if you can afford the higher payment and want to be debt-free sooner. If your goal is maximum monthly cash-flow relief, stick with a 30-year (or match your remaining term). Run both terms in the calculator and compare break-even plus lifetime interest.

A rate-and-term refinance replaces your current balance (plus closing costs if rolled in) at a new rate/term without taking cash out. A cash-out refinance increases the loan balance above what you owe so you receive cash at closing. Rate-and-term is typically cheaper and easier to qualify for; cash-out has stricter LTV limits and often a slightly higher rate.

Conventional refinances often close in 30–45 days (sometimes 60). FHA Streamline and VA IRRRL can be faster—often about 2–4 weeks—because appraisals and full underwriting are frequently waived. Timeline depends on appraisal (if required), title work, employment verification, and lender backlog. Lock your rate for enough days to cover possible delays.

Yes. Conventional PMI can often be removed later when you hit ~20% equity (or via refinance into a loan without PMI once LTV allows). FHA MIP on many post–June 2013 loans lasts for the life of the loan if you put less than 10% down—an FHA Streamline does not remove MIP; switching to a conventional loan once you have enough equity is usually required to drop mortgage insurance.

Rolling costs into the balance means no cash at closing but a higher loan amount (and usually more interest). A no-closing-cost option may raise your rate instead. If you expect to move soon after break-even, paying costs in cash (or a short break-even) can be better. If cash is tight and you’ll stay many years, financing costs can still pencil out—compare both in the calculator.

Conventional refinances commonly need about 620+, with better rates at 740+. FHA Streamline is more flexible on credit; VA IRRRL has no VA-mandated minimum score (lenders may still set overlays). A score drop since purchase can wipe out rate savings—get a soft-pull quote before paying for a full application.

Rate-and-term conventional refinances often allow up to ~80–97% LTV depending on product and occupancy; cash-out is usually capped lower (often ~80% LTV). FHA and VA programs have their own LTV rules. Low equity can require PMI or block cash-out. An appraisal (when required) determines current value and LTV.

Often no. Late in the loan, most of each payment is principal, so a lower rate saves less interest. Closing costs may never be recovered if few payments remain. Exceptions: a large rate drop with very low costs, or switching to remove expensive MIP/PMI when equity allows. Run break-even against your remaining months.

Refinancing an adjustable-rate mortgage (ARM) into a fixed rate locks your payment before the ARM adjusts higher. It can make sense even if the fixed rate is only slightly below your current ARM rate, if a reset would push the payment up sharply. Conversely, refinancing a fixed loan into an ARM is speculative—only consider it if you plan to sell or refinance again before adjustment and understand the risk.

A hard credit inquiry and a new account can cause a temporary dip. Multiple mortgage inquiries in a short window are often treated as one for scoring. On-time payments on the new loan help recovery. The bigger risk is applying when you won’t qualify or when the new rate isn’t better—shop with soft pulls / lender pre-qual where possible.

Mortgage interest may still be deductible subject to IRS limits (acquisition debt rules, itemizing, etc.). Points paid to refinance are generally deducted over the life of the loan, not all at once (unlike some purchase points). Closing-cost line items like title insurance aren’t usually deductible. This is not tax advice—confirm with a tax professional or IRS Publication 936.

Typical conventional packages include: recent pay stubs, W-2s or tax returns, bank statements, ID, homeowners insurance info, and details on your current mortgage. Streamline FHA/VA products often waive or reduce income and appraisal docs. Having statements ready speeds underwriting and rate-lock timelines.
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.