The Break-Even Formula
The math is simple. You take your total costs and divide them by your monthly savings to find out exactly how many months it takes to “break even” on your investment.
Total Closing Costs ÷ Monthly Savings = Months to Break Even
Why it’s called “Net Tangible Benefit” (NTB): While you call it “breaking even,” your lender calls it an NTB test. In 2026, federal rules for FHA and VA loans require that you reach this break-even point within 36 months to prove the loan actually benefits you.
Identifying the Three Key Variables
The 2026 Overland Park Example
If you’re moving from a 7.25% rate down to 6.25%:
- Savings: Old $2,850 | New $2,600 = $250/month
- Costs: Lender, Title, Appraisal = $5,500
- The Result: $5,500 ÷ $250 = 22 Months
Since 22 months is less than the standard 36-month Net Tangible Benefit threshold, this refinance is a “Green Light” for 2026 approval.