Mortgage Loan Comparison Calculator
Compare monthly payments and total costs between two mortgage offers at different interest rates over the same term. Perfect for borrowers shopping multiple lenders and evaluating the real dollar impact of rate differences.
About this calculator
Both loans use the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (term in years × 12). The calculator computes each loan's monthly payment separately and shows you the difference: Δ = M₂ − M₁. Even a half-point difference in interest rate can translate to hundreds of dollars per month and tens of thousands over the full term. This tool lets you quantify that gap precisely so you can judge whether paying points or accepting a higher origination fee is worth the lower rate, or vice versa.
How to use
You're comparing two 30-year loans for $400,000. Loan 1 is at 6.75% and Loan 2 is at 7.25%. Loan 1 monthly payment: 400,000 × (0.005625 × (1.005625)^360) / ((1.005625)^360 − 1) ≈ $2,594. Loan 2 monthly payment: 400,000 × (0.006042 × (1.006042)^360) / ((1.006042)^360 − 1) ≈ $2,727. Monthly difference: $2,727 − $2,594 = $133. Over 30 years, that's $133 × 360 = $47,880 in additional total payments on Loan 2 — a concrete figure to weigh against any lender fees or points associated with Loan 1.
Frequently asked questions
How much does a 0.5% difference in mortgage rate actually cost over 30 years?
On a $400,000 30-year mortgage, a 0.5% rate difference (e.g., 6.75% vs. 7.25%) produces a monthly payment gap of roughly $130–$140. Multiplied over 360 payments, that's approximately $47,000–$50,000 in additional total payments. The gap grows with the loan amount — on a $600,000 mortgage, the same half-point difference costs around $70,000 more over 30 years. This underscores why shopping even a fraction of a percent lower can be worth significant effort and negotiation.
Should you pay mortgage points to get a lower interest rate?
Paying discount points (each point equals 1% of the loan amount) lowers your interest rate and monthly payment in exchange for an upfront cash cost. To evaluate whether it's worthwhile, divide the upfront cost by the monthly savings to find your break-even month. For example, paying $4,000 in points to save $80 per month breaks even in 50 months (about 4 years). If you plan to stay in the home beyond the break-even point, paying points is typically a smart investment. This comparison calculator helps you see the monthly savings side of that equation clearly.
What factors besides interest rate should you compare when choosing between two mortgage loans?
Beyond the interest rate, you should compare the annual percentage rate (APR), which folds in lender fees and gives a truer cost-of-borrowing picture. Also evaluate origination fees, discount points, prepayment penalties, and whether the rate is locked and for how long. For ARMs, compare caps and margins in addition to the initial rate. Finally, consider the lender's reputation for closing on time and servicing the loan afterward — a slightly higher rate with a reliable lender can be preferable to a low rate with a lender known for delays or poor service.