Mortgage Loan Comparison Calculator

Put both offers side by side and compare the total cost over how long you'll actually keep the loan — not just the monthly payment or the rate — counting cash to close, every payment you make, and the equity you build along the way.

This calculator does exactly that. For each scenario it adds up your cash to close (down payment + closing costs + discount points − lender credit), then tracks the running total of what you pay month after month, and subtracts the equity you've earned back. The result is your true cost — the money that is actually gone for good at any point in time. The cheaper rate doesn't automatically win; the offer with the lowest true cost at your time horizon does.

To compare apples to apples, line up the things that should match and isolate the one thing you're testing:

• Same purchase price and down payment — unless you're deliberately testing a bigger down payment.
• Same loan term when you're comparing rates and credits; switch the term only when that's the question.
• Read the rate and the closing costs together — a lower rate that costs three points up front is a different deal than a slightly higher rate with a lender credit.

Closing costs are the one-time fees you pay to get the loan — lender, title, appraisal, escrow, and government charges — typically 2%–5% of the loan amount, and they matter because they're real money spent before you've made a single payment.

On a $400,000 loan that's roughly $8,000–$20,000 out the door at closing. Because this money is spent immediately, it weighs heavily on the early years of the comparison — a loan with a slightly better rate but $6,000 more in costs starts the race that far behind.

What's usually inside closing costs:

• Lender fees — origination, underwriting, and any discount points you choose to buy.
• Third-party fees — appraisal, title insurance, settlement, and recording.
• Prepaids & escrows — upfront property tax, homeowners insurance, and prepaid interest set aside at closing.

This calculator folds closing costs (minus any lender credit) straight into the cash to close, so the option with the bigger fee starts behind and has to earn its way back through a lower payment. That catch-up point is the break-even month. For a deeper look at trading credits against points, see our Seller Concession Optimizer.

The loan term is how many years you have to pay the loan off — almost always 15 or 30 years — and it's the single biggest lever on total interest: a shorter term means a higher monthly payment but dramatically less interest paid over the life of the loan.

A 15-year loan also usually carries a lower interest rate than a 30-year, which compounds the savings. Here's how the same $400,000 loan behaves at each term (principal & interest only, illustrative rates):

The 15-year payment is about $750 more a month, but it saves roughly $339,000 in interest and you own the home free and clear 15 years sooner. The 30-year keeps your required payment low and your cash flow flexible — and you can always pay extra toward a 30-year to mimic a 15-year without being locked into the higher payment.

No — the lowest monthly payment is often the most expensive loan over time, so look at total cost and your break-even point, not the smallest payment.

A low payment usually comes from one of three things, and each has a cost the monthly number hides:

• A longer term — spreading the same balance over 30 years instead of 15 lowers the payment but multiplies total interest.
• Paying points up front — you buy the lower payment with thousands in cash at closing, which only pays off if you keep the loan long enough.
• A smaller down payment — less cash now, but a bigger balance, more interest, and likely mortgage insurance.

That's why this calculator ranks options by true cost at your time horizon and shows a break-even month. If you'll sell or refinance in five years, an option that pays for itself in eight years is the wrong pick — even if its payment looks great. If you're staying for the long haul, the loan that's pricier on day one can be the clear winner.

They're opposites: discount points are cash you pay up front to lower your rate, while a lender credit is money the lender gives you toward closing costs in exchange for a higher rate.

It's a trade between cash today and cost over time, and the right answer depends entirely on how long you'll keep the loan.

One point typically costs 1% of the loan amount ($4,000 on a $400,000 loan) and buys roughly a quarter-point off your rate, though pricing varies daily. In this calculator, enter points in the buydown/points field (it adds to cash to close) and a lender credit in the credit field (it subtracts) — then watch how each shifts the break-even month. Points and credits are also why two loans at the same rate can have very different true costs.

The note rate is the interest rate used to calculate your monthly payment; the APR is a broader yearly cost figure that also folds in points, the program fee, and other prepaid finance charges — so APR is usually a bit higher than the note rate and is the better tool for comparing the all-in cost of two offers.

Think of it this way: the note rate answers “what's my payment?” and the APR answers “what does this loan really cost once I include the fees I paid to get this rate?” A loan with a low note rate but three points of cost can carry a higher APR than a loan with a slightly higher rate and no points.

This calculator estimates APR the Reg Z (Truth-in-Lending) actuarial way: it solves for the rate that discounts your full payment stream back to the amount financed — your loan minus the points and any financed program fee, net of lender credits. Property taxes and homeowners insurance are not finance charges, so they're excluded from APR by rule. APR is a great tiebreaker, but it assumes you keep the loan the full term — if you'll move sooner, lean on the break-even month instead.

Mortgage insurance protects the lender (not you) when your down payment is small, and whether you pay it — and for how long — depends on the loan program: conventional uses PMI that can drop off, while FHA uses MIP that often lasts the life of the loan.

Here's how the major programs handle it, and exactly when it goes away:

The conventional drop-off is real and automatic: under the Homeowners Protection Act, PMI terminates once your scheduled balance reaches 78% of the home's original value. This calculator models that automatically — PMI simply disappears from the payment at the right month, which can swing a close comparison. FHA is the big gotcha: with less than 10% down, that monthly MIP never goes away on its own, so the only way out is to refinance — often into a conventional loan once you have 20% equity.

It can — you can enter monthly property tax and homeowners insurance so the payment shown is a full PITI estimate, but the head-to-head true-cost ranking focuses on the parts a loan choice actually changes: principal, interest, mortgage insurance, and your closing costs.

That's an intentional design choice. Property taxes and homeowners insurance are tied to the home, not the loan — they're roughly the same no matter which lender or rate you pick — so including them in the comparison would add a big constant to both sides and blur the difference you're actually deciding between.

What drives the ranking is what differs between the two offers: the rate, the points and credits, the loan term, and mortgage insurance. For a complete monthly payment with taxes and insurance baked in — and to see what price you can comfortably carry — use our What Can I Afford calculator.

An affordability calculator answers “how much house can I buy?” — this one answers “I've picked a house; which of these two loan offers is the better deal?”

They're built for different moments in the journey and feed into each other:

Use them in order: start with What Can I Afford to set your price range, then bring your competing Loan Estimates here to pick the offer that costs you the least over the years you'll actually own the home. If a temporary rate reduction is on the table, our Temporary Buydown calculator pairs well with this one.

Enter both offers, set your time horizon, and read the verdict card — it names the cheaper loan, the dollar amount you save, and the break-even month where a lower-rate, higher-cost option overtakes a cheaper-up-front one.

• Fill in each loan's rate, term, down payment, closing costs, points, and any lender credit from your Loan Estimate.
• Set the time horizon to how long you realistically expect to keep the loan — this is what decides the winner.
• Read the true cost for each option: cash to close, plus every payment, minus the equity you've built.
• Check the break-even month — if it lands after you plan to sell or refinance, the “more expensive” loan is the smarter choice for you.

Two options within about $250 at your horizon are treated as a tie — that close, pick the one with the lower up-front cash or the program terms you prefer. Estimates are for comparison only and aren't financial advice; we'll confirm the real numbers with you before you commit.