Loan comparison calculator
Enter two or three offers, see which one really costs less.
How do I compare two loan offers?
Compare what each loan costs you, not just the rate or the payment: the interest you pay plus points and lender fees. The CFPB suggests asking for the total cost over a few timeframes — the shortest, longest and most likely time you will keep the loan. This calculator does exactly that for the number of years you enter and for the full term.
What is a point?
A discount point is a fee paid up front to get a lower rate. One point equals 1% of the loan amount (CFPB), so one point on a $300,000 loan is $3,000. Enter points as a percent and other lender charges, such as origination or underwriting fees, in dollars.
How is the cost worked out?
The monthly payment is P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r the annual rate ÷ 12 and n the number of months. Each month's interest is the balance × r; any extra payment goes to principal. Cost = points + fees + the interest paid while you keep the loan. The balance left when you sell or refinance is repaid, so it is not a cost. Points and fees are paid on day one while a lower rate pays you back a little each month — sell early and the cheaper-looking loan can cost more.
Example
$300,000 for 30 years. Offer A: 6.5%, no points, $3,000 in fees — $1,896.20 a month. Offer B: 6.125% with 1 point ($3,000) plus $3,000 in fees — $1,822.83 a month. Over 5 years A costs $97,605.18 and B $94,960.75, so B is $2,644.43 cheaper; B pulls ahead after 2 years 8 months. Over the full 30 years: $385,633.47 vs $362,219.38.
What is the effective rate with fees?
The interest rate at which your payments, plus the balance you would repay at the end of the period, add up to the cash you actually receive after points and fees. It rises the sooner you pay the loan off, because the upfront costs are spread over fewer months. The APR on a Loan Estimate is set by federal rules that decide which charges count, so it can differ; use this figure to compare offers you entered the same way.
Can I compare a 15-year loan with a 30-year loan?
Yes, but the payments are not comparable: the shorter loan has a higher payment and builds equity faster. Compare cost over the same holding period and also the balance left at that point. A lower cost with a much higher balance is not the same as a cheaper loan.
When do discount points pay off?
When you keep the loan longer than the break-even month. Divide the upfront cost by the monthly saving to get a rough figure; the calculator finds the exact month from the full schedules, which also accounts for the balance paid down.
Reading the results
For each offer the tool shows the payment, the cost over the holding period you entered and over the full term, and the balance still owed at the end of the holding period. Cost counts points, fees and interest, not principal repaid, because principal comes back to you as equity. The cheapest offer for a short stay can differ from the cheapest for the full term, which is why both columns are shown. The effective rate is the rate at which the payments plus the remaining balance equal the cash you received after upfront costs.
Worked example: 15 years against 30 years
Take a $250,000 loan with $2,500 in fees and no points. Offer X is 30 years at 6.75%: payment $1,621.50. Offer Y is 15 years at 6.00%: payment $2,109.64, which is $488.15 a month more. After 5 years you owe $234,689 on X and $190,023 on Y, so Y has paid down $44,667 more principal. The interest-plus-fees cost over those 5 years is $84,479 for X and $69,101 for Y. Over the full term it is $336,238 against $132,236.
Mistakes to avoid
Looking only at the monthly payment ignores points and fees paid on day one. Entering points as dollars instead of percent changes the cost a hundredfold: points are a percent of the loan, fees are dollars. Comparing offers with different loan amounts needs care, because rolling fees into the loan raises the balance. Lastly, the holding period is a guess; try a short and a long one and see whether the winner changes.
Sources: CFPB, "What are discount points and lender credits?" (one point is 1% of the loan; compare total cost over several timeframes). Payments use the standard fixed-rate formula. Related tools: loan calculator, refinance calculator, mortgage calculator, APR calculator.
Estimates for planning only — not financial advice. Your lender's figures decide. How we check our calculators.