Loan comparison calculator
The lowest rate is not always the cheapest loan. Points and lender fees shift cost to closing day, and whether that trade works depends entirely on how long you keep the mortgage. Enter two quotes below to see monthly payment, upfront cash, interest paid and the exact month the cheaper rate breaks even.
Option A
Option B
Option A: total cost over 30 years
- Principal$400,00044%
- Interest$510,17856%
- Points & fees$3,2000%
Option B: total cost over 30 years
- Principal$400,00046%
- Interest$463,35353%
- Points & fees$7,2001%
Swipe the comparison table sideways to see both options.
| Measure | Option A | Option B |
|---|---|---|
| Monthly principal & interest | $2,528 | $2,398 |
| Upfront points & fees | $3,200 | $7,200 |
| Interest over full term | $510,178 | $463,353 |
| Total cost over full term | $913,378 | $870,553 |
| Paid by year 7 | $215,575 | $208,649 |
| Interest by year 7 | $174,040 | $160,007 |
| Balance left at year 7 | $361,665 | $358,558 |
What this comparison says
- Option B's payment is $130 lower per month, and its upfront cost is $4,000 higher.
- Paying the extra upfront cost breaks even after about 31 months (2.6 years). Keep the loan longer than that and the lower rate wins.
- If you keep the loan 7 years, Option B costs less in total cash paid. Over the full term, Option B costs less.
How to read a break-even
Every rate-versus-cost decision reduces to one calculation: extra money paid today divided by money saved each month. Suppose Option A is 6.5% with no points and Option B is 6.0% with one point on a $400,000 loan. Option B costs $4,000 more at closing and saves about $131 a month, so it breaks even at roughly month 31 — two and a half years. Hold the loan longer and Option B wins by a widening margin; sell or refinance sooner and the $4,000 is simply gone.
The break-even is honest only if the rest of the quote is identical. A lender can advertise a lower rate while quietly adding $1,800 of origination charges, which pushes the real break-even out by more than a year. Compare the lender-controlled charges line by line on the Loan Estimate, page 2, section A.
Three comparisons worth running
Points versus no points
Same lender, same term, different rate-and-point combinations. This isolates the value of buying the rate down and is where the break-even math matters most.
30-year versus 15-year
Set Option A to 30 years and Option B to 15 years at a rate about 0.6% lower. The interest saved is usually enormous, but check whether the higher required payment still leaves room in your budget.
Lender A versus lender B
Two competing Loan Estimates with their own rates and origination charges. Judge them on total cash paid by your expected horizon, not on the headline rate or the APR.
Worked example: $400,000 loan, two quotes
| Measure | 6.5%, no points | 6.0%, 1 point |
|---|---|---|
| Monthly principal & interest | $2,528 | $2,398 |
| Upfront points & fees | $3,200 | $7,200 |
| Interest over 30 years | $510,178 | $463,353 |
| Total cost paid by year 5 | $154,880 | $150,102 |
| Break-even on the extra $4,000 | — | about month 31 |
The buying-down option wins in every column here because the horizon is longer than the break-even. Shorten the expected holding period to two years in the calculator and the ranking flips.
Frequently asked questions
What is a discount point worth?
One point costs 1% of the loan amount and typically buys between 0.125% and 0.25% off the rate, depending on the lender and the day. On a $400,000 loan a point is $4,000, so the question is always how many months of payment savings it takes to recover that $4,000.
How do I know if paying points is worth it?
Divide the extra upfront cost by the monthly payment savings to get the break-even month. If you expect to keep the loan past that point — no sale, no refinance — the points pay off. Most borrowers refinance or move well inside ten years, so break-evens beyond about six years rarely pay out in practice.
Why compare total cost at a horizon instead of over 30 years?
Almost nobody keeps a 30-year mortgage for 30 years. Comparing full-term interest flatters low-rate, high-fee offers that you will never hold long enough to benefit from. Setting a realistic horizon — five, seven or ten years — produces a much more honest ranking.
Should I compare APR instead?
APR is a useful single number but it assumes you hold the loan for the entire term and it treats fee structures inconsistently between lenders. Comparing actual cash out of pocket at your expected horizon, as this tool does, is more reliable than ranking two APRs.
Is a 15-year loan better than a 30-year?
A 15-year term carries a rate roughly 0.5% to 0.75% lower and cuts total interest dramatically, but the payment is about 45–50% higher. Enter both terms above to see the trade-off. A 30-year loan with voluntary extra principal gives you most of the interest savings while keeping the option to fall back to the lower required payment.
Which fees should I include?
Include everything the lender controls: origination charges, underwriting, processing, rate-lock extension fees and points. Leave out third-party costs that are identical regardless of lender — appraisal, title insurance, recording fees, prepaid taxes and insurance — because they do not distinguish the offers.
Methodology
Monthly principal and interest use the standard amortization formula. Upfront cost is discount points expressed as a percentage of the loan plus the lender fees you enter. Remaining balance at your chosen horizon is computed from the closed-form balance equation, and interest paid to that point is total payments made less principal retired. Break-even divides the difference in upfront cost by the difference in monthly payment. Escrowed taxes and insurance are excluded because they are identical between two offers on the same property and would only dilute the comparison. Figures are estimates for education, not a quote or an offer of credit.