Mortgage Comparison Calculator
Compare two or three mortgage offers side by side: monthly payment, total interest, total cost with points and fees, and the break-even month.
Use the rate, points and lender fees from each Loan Estimate (page 2, section A). Fees that are the same for every lender, such as title and taxes, can be left out. Payments are principal and interest only.
| Loan A 6.75%, 30 yr | Loan B 6.375%, 30 yr | Loan C 5.875%, 15 yr | |
|---|---|---|---|
| Monthly payment | $2,270.09 | $2,183.54 | $2,929.91 |
| Points | $0 | $3,500 | $0 |
| Up-front cost (points + fees) | $1,500 | $5,000 | $1,500 |
| Total interest | $467,234 | $436,076 | $177,385 |
| Total cost (all payments + up-front) | $818,734 | $791,076 | $528,885 |
| More than the cheapest | +$289,849 | +$262,191 | Lowest |
| Cost if you keep it 7 years | $159,944 | $154,210 | $121,601 |
| More than the cheapest at that point | +$38,343 | +$32,609 | Lowest |
| Balance left at that point | $317,756 | $315,792 | $223,988 |
"Cost if you keep it" is the up-front cost plus the interest paid by then. Principal you have repaid is left out because it comes back to you as equity when you sell or refinance.
- Loan B costs more at closing and breaks even with Loan A in month 32 (2 years 8 months). Keep it longer than that and it comes out ahead. Counting only the lower payment, the extra $3,500 takes 41 months to recover.
- Loan C costs less than Loan A at every point, from closing to payoff.
The break-even month compares up-front cost plus interest paid to date. For two loans with the same term it usually comes sooner than dividing the extra cost by the payment saving, because the lower-rate loan also pays down its balance faster.
What Mortgage Comparison Calculator Does
This calculator puts two or three fixed-rate mortgage offers side by side. For each one it works out the monthly principal and interest, the total interest over the full term, the up-front cost of points and lender fees, and the total cost of the loan. If you enter how long you expect to keep the mortgage, it also shows what each offer costs over that period.
The comparison that usually decides between offers is timing. A loan with points costs more at closing and less each month, so it only comes out ahead if you keep it long enough. The calculator finds the month at which each loan starts costing less than Loan A, counting interest saved as well as the lower payment, and for same-term loans it also shows the simpler points-divided-by-savings figure.
How to Use Mortgage Comparison Calculator
- Enter the loan amount and, if you like, how many years you expect to keep the loan
- For each loan, enter the interest rate, term, discount points and other lender fees
- Add or remove Loan C to compare two or three offers
- Compare the monthly payment, total interest, total cost and the cost over the years you plan to keep it
- Read the break-even month for each loan against Loan A, then copy the comparison
Formula Used by Mortgage Comparison Calculator
Monthly payment (level-payment amortization)
M = P × r ÷ (1 − (1 + r)^−n)
- P
- Loan amount
- r
- Annual interest rate ÷ 12
- n
- Number of monthly payments (years × 12)
Worked example
Freddie Mac’s published example: $190,000, 30-year fixed at 4.5%.
- r = 0.045 ÷ 12 = 0.00375
- n = 360
- M = 190,000 × 0.00375 ÷ (1 − 1.00375^−360) = 962.70
Result: $962.70 a month, the same figure Freddie Mac prints.
Break-even month for points
First month m where (U₂ + I₂(m)) < (U₁ + I₁(m))
- U
- Up-front cost: points (1 point = 1% of the loan) plus lender fees
- I(m)
- Interest paid from the first payment through month m
Worked example
The CFPB’s example: $180,000 over 30 years at 5.0% with no points, or 4.875% for 0.375 points.
- Points: 0.375% × 180,000 = $675
- Payments: $966.28 and $952.57, a saving of $13.71
- Payment-only break-even: 675 ÷ 13.71 = 49.2, so month 50
- Interest in month 1 is $750.00 against $731.25, a saving of $18.75 that shrinks slowly
- Up-front cost plus interest is still $2.06 higher for the points loan after 36 months and $16.55 lower after 37
Result: The points pay for themselves in month 37 on an interest basis, 13 months sooner than the payment-only estimate.
Example Comparison: $350,000 Loan
The calculator’s starting values, with $1,500 of lender fees on each loan. Rates are illustrations, not quotes.
| Loan A | Loan B | Loan C | |
|---|---|---|---|
| Rate and term | 6.75%, 30 yr | 6.375%, 30 yr | 5.875%, 15 yr |
| Points | 0 | 1 ($3,500) | 0 |
| Monthly payment | $2,270.09 | $2,183.54 | $2,929.91 |
| Total interest | $467,234 | $436,076 | $177,385 |
| Total cost (payments + up-front) | $818,734 | $791,076 | $528,885 |
| Cost if kept 7 years (up-front + interest) | $159,944 | $154,210 | $121,601 |
| Break-even against Loan A | Month 32 | Cheaper from the start |
How to Read Your Result
Why “cost if you keep it” leaves out principal
When you sell or refinance, the balance is paid off and whatever principal you repaid comes back as equity. What you have actually spent on the loan by then is the up-front cost plus the interest. Comparing that figure at the year you expect to move is a fair test between offers with different points, fees or terms.
The two break-even figures
Dividing the cost of points by the payment saving is the common shortcut, and the calculator shows it for loans with the same term. It undercounts the benefit, because part of each payment on the lower-rate loan goes to principal instead of interest. Counting interest directly moves the CFPB example from month 50 to month 37, and the default example from month 41 to month 32.
Different terms
A 15-year loan has a much higher payment than a 30-year one, so comparing payments says little. It usually wins on total interest and on cost at almost any horizon, as Loan C does in the example. The calculator reports when the cheaper loan changes, if it does, across the whole of the longer term.
Limitations & Accuracy Notes
- Fixed-rate loans only. Adjustable-rate loans, interest-only periods and balloon payments are not modeled.
- Payments are principal and interest. Property tax, homeowners insurance, mortgage insurance and HOA dues are left out because they are usually the same whichever lender you pick; mortgage insurance is the exception if offers have different down payments or loan types.
- The comparison ignores what the cash spent on points could earn elsewhere and any tax treatment of mortgage interest or points.
- Extra payments and refinancing during the loan are not modeled.
- All offers use the same loan amount. If points are financed into the loan, enter the larger amount for that loan in a separate comparison.
Frequently Asked Questions
How do I compare two mortgage offers?
Put each offer’s rate, term, points and lender fees side by side, then compare what each one costs over the time you expect to keep the loan, not only the monthly payment. The calculator shows the payment, total interest, up-front cost and total cost of each loan, plus what each costs if you sell or refinance after a set number of years.
How do I calculate the break-even point on mortgage points?
The quick method divides the extra up-front cost by the monthly saving. In the CFPB’s example, $675 in points lowers the payment on a $180,000 loan by about $14, so it takes a little over four years to earn back. Counting interest saved instead of payment saved is more precise, because the lower rate also pays the balance down faster; that puts the same example at month 37.
Is a 15-year or a 30-year mortgage cheaper?
Over the full term a 15-year loan almost always costs far less in interest, but the payment is higher. On $350,000, a 30-year loan at 6.75% costs $2,270.09 a month and $467,234 in interest. A 15-year loan at 5.875% costs $2,929.91 a month and $177,385 in interest. Those rates are only examples, so enter the ones you are quoted.
What is a discount point on a mortgage?
A point is a fee equal to 1% of the loan amount, paid at closing in exchange for a lower interest rate. One point on a $350,000 loan is $3,500. The CFPB notes that points don’t have to be whole numbers and that they appear on page 2, section A, of the Loan Estimate. Lender credits work the other way: a higher rate for less cash at closing.
How is a monthly mortgage payment calculated?
The standard amortization formula is M = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r is the annual rate divided by 12 and n is the number of monthly payments. Freddie Mac’s example of $190,000 at 4.5% over 30 years gives $962.70, and this calculator matches it to the cent. Taxes, insurance and PMI are not included.
Which closing costs should I include in a mortgage comparison?
Include the costs that differ between offers, such as discount points, origination charges and other lender fees. Costs that stay the same whichever lender you choose, like state transfer taxes, can be left out because they don’t change which loan is cheaper. Enter points in the points field and the other lender charges in the fees field for each loan.
What does “cost if you keep it” mean?
It is the up-front cost plus the interest paid by the end of the years you enter. Principal you have repaid is left out, because it comes back to you as equity when you sell or refinance. With the default offers kept for 7 years, the loan with 1 point costs $154,210 against $159,944 for the loan with no points.
References & Further Reading
- Freddie Mac My Home — Breaking down PMI — Worked example: $190,000 and $160,000, 30-year fixed at 4.5%, principal and interest $962.70 and $810.70
- Consumer Financial Protection Bureau — How should I use lender credits and points? — One point equals 1% of the loan; points shown on page 2, section A of the Loan Estimate; $180,000 example at 5.0% vs 4.875% for 0.375 points