About the Mortgage Offer Comparison Calculator
Lenders rarely quote the same thing: one offers a lower rate with points, another a higher rate with no fees. This calculator lines up to four mortgage offers for the same loan amount and term and shows which one is actually cheapest for the number of years you expect to keep the loan.
For each offer enter the interest rate, discount points and lender fees from its Loan Estimate. The calculator works out the monthly principal-and-interest payment, an estimated APR, and the total of upfront costs plus interest paid over your horizon. It also shows how many months each offer takes to break even against Offer A, which tells you whether paying points makes sense.
Third-party costs such as title, appraisal and taxes are usually similar between lenders, so leave them out unless they differ. The APR shown treats points and lender fees as finance charges, which is close to — but not identical to — the APR on a Loan Estimate.
How to use the mortgage offer comparison calculator
- 1Enter the loan amount, term and how long you expect to keep the loan.
- 2Choose how many offers to compare.
- 3For each offer, enter the rate, discount points and lender fees from its Loan Estimate.
- 4Compare monthly payments, estimated APR and total cost over your horizon.
- 5Check the break-even months to judge whether paying points is worth it.
Formula and method
Every offer is for the same loan amount L and term, so the principal you repay is identical; what differs is the upfront cost and the interest. The calculator amortizes each offer month by month at its own rate r (annual rate ÷ 12) and adds the interest paid during your horizon to the points and lender fees. The offer with the smallest total is cheapest for that horizon.
Break-even against Offer A is the first month in which an offer with higher upfront costs has a lower cumulative cost (or the month an offer with lower upfront costs stops being cheaper). The estimated APR solves for the rate at which the monthly payment repays only the amount financed (L minus points and fees) over the full term, the same method behind Truth in Lending APR.
- L
- Loan amount
- r
- Monthly interest rate of the offer
- n
- Number of monthly payments in the term
- H
- Years you expect to keep the loan
Worked examples
Three offers on a $400k 30-year loan, 7-year horizon
Offer A (6.75%, no points, $3,000 fees) has the highest payment. Offer C pays 2 points ($8,000) plus $4,000 of fees for a 6.25% rate, saving about $132 a month versus A. Over seven years Offer C costs about $179,015 in fees and interest versus $184,079 for A — it breaks even after 54 months — so Offer C is cheapest by about $5,064. Its estimated APR is 6.541%.
Same offers, 3-year horizon
If you expect to sell or refinance within three years, there is not enough time to recover the points: Offer A costs about $82,698 over three years against $85,678 for Offer C, so the no-points offer becomes the cheapest choice.
Frequently asked questions
How do I compare two mortgage offers?+
Use the same loan amount and term, then compare the rate, points and lender fees on each Loan Estimate. Add upfront costs to the interest you will pay over the years you expect to keep the loan; the lowest total wins.
Is APR the best way to compare mortgages?+
APR spreads points and fees over the full loan term, so it favours paying points if you keep the loan for 30 years. If you will move or refinance sooner, total cost over your real horizon is a better guide.
Should I pay points for a lower rate?+
Paying points makes sense if you keep the loan beyond the break-even point — the months it takes for the lower payment to recover the upfront cost. For a quick estimate, divide the extra upfront cost by the monthly payment saving; this calculator finds the exact month including the slower principal paydown.
Which Loan Estimate fees should I compare?+
Focus on section A (origination charges, including points) and the interest rate, since those are set by the lender. Section B and C services and government fees tend to be similar, though you can shop for some of section C.
How many mortgage quotes should I get?+
Getting at least three Loan Estimates is commonly recommended. Multiple mortgage credit checks within a short shopping window are generally treated as a single inquiry for credit scoring.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.