Refinance Break-Even Calculator - Rental Flow
Landlord Calculator

Refinance Break-Even Calculator

Thinking about refinancing a rental? Compare your current payment to the new offer and find out exactly how many months it takes the monthly savings to repay the closing costs.

▶ Run the Calculator

Opens live in the Rental Flow app, no account needed.

What this calculator does

A lower rate doesn't always make a refinance worth it once you factor in closing costs. This calculator computes both mortgage payments, the monthly savings between them, and how long it takes those savings to cover what you'll pay to refinance.

The formula

Monthly Savings = Current Payment − New Payment
Months to Break Even = Closing Costs ÷ Monthly Savings

If you plan to hold (or keep this loan on) the property longer than the break-even period, the refinance is worth it on a savings basis. The closing costs pay for themselves and everything after that is pure savings.

Worked example

$220,000 balance: 7.0% to 6.0%, 25 years remaining, $4,000 closing costs

Current monthly payment (7.0%)$1,554.91
New monthly payment (6.0%)$1,417.46
Monthly savings$137.45
Closing costs$4,000
Months to break even29.1

It would take just over two years and five months of savings to recoup the closing costs. After that, the refinance is pure upside for as long as the loan continues.

When does refinancing break even?

Refinancing replaces your current loan with a new one, usually to lower the rate or payment, but it carries closing costs. The break-even point is how many months of monthly savings it takes to repay those costs. If you plan to keep the property well past that point, the refinance likely pays off.

A lower rate alone does not make a refinance worth it. Compare the monthly savings against the upfront cost, and weigh how long you intend to hold the property. If you might sell before breaking even, the refinance can cost more than it saves.

Try it with your own numbers →

Frequently asked questions

Divide your total closing costs by the monthly payment savings from the new loan. The result is the number of months it takes for the savings to repay the cost. If you will own the property longer than that, refinancing generally makes sense.
Not by itself. A lower rate reduces your payment, but closing costs can take years to recoup. If you sell or refinance again before reaching the break-even point, you lose money on the deal, so the holding period matters as much as the rate.
Refinancing typically involves lender fees, an appraisal, title and escrow charges, and sometimes points. Together these closing costs are what the monthly savings must repay before you come out ahead, which is exactly what the break-even calculation measures.
It can. If you refinance a loan you have been paying for years into a new long-term loan, you restart the clock, which lowers the payment but can increase total interest. Compare both the monthly savings and the new total cost before deciding.