How the loan comparison calculator works
Enter two offers side by side. For each loan you give the amount, rate, term, points (a percentage of the loan), other upfront fees, any monthly fee and, if there is one, a balloon payment due with the last payment. The calculator then shows, for both loans:
- Monthly payment – principal and interest, plus any monthly fee.
- Total interest – everything you pay above the amount you borrowed, not counting fees.
- Total cost of borrowing – interest plus all upfront and monthly fees. The headline compares this number.
- Effective APR – the yearly rate that includes the fees (explained below).
- Break-even month – when the loan with higher upfront costs starts to cost you less.
The charts show where the money goes (amount borrowed, interest and fees, drawn to the same scale) and how the balance and the cost so far develop over the years.
Interest rate versus effective APR
The interest rate prices only the money you borrow. Points, origination fees and monthly loan fees are costs the rate does not show. The annual percentage rate (APR) folds those charges into one yearly figure so offers can be compared fairly. The CFPB explains the difference in plain English.
This page calculates the effective APR in the style of Regulation Z (Truth in Lending). It finds the yearly rate at which your payments, any monthly fees and the balloon are worth exactly the money you actually receive: the amount borrowed minus the upfront fees. For monthly payments that rate is the monthly rate times 12, which is how Appendix J works for regular payments.
It is an approximation, not a disclosure. A lender's official APR follows 12 CFR 1026.22 and counts only charges that are part of the finance charge. Title, appraisal and escrow costs usually are not, so leave them out. Odd first periods and daily interest are ignored here, so a small gap between this page and your lender is normal.
Break-even: when do points pay off?
One point costs 1% of the loan and usually lowers the rate. Because the cost comes first and the savings arrive month by month, there is a break-even month. The calculator adds up, for each loan, the interest and fees you would have paid if you repaid the loan in full at that month. The month where the high-upfront loan stops being more expensive is the break-even.
Example with the numbers pre-filled on the page: a $300,000 30-year loan. Loan A is 6.5% with $1,000 in fees, about $1,896 a month. Loan B is 6.0% with 1.5 points ($4,500) plus the same $1,000, about $1,799 a month. Loan B costs $4,500 more at closing and saves about $98 a month, so it moves ahead around month 36 (3 years). If you keep the loan for the full 30 years, Loan B costs roughly $30,600 less in interest and fees. If you sell or refinance within the first three years, Loan A is cheaper. The effective APRs, about 6.53% and 6.17%, point the same way.
The break-even compares only the loans. It does not assume you invest the money you save, so treat it as one input, not a verdict.
Balloon loans and different terms
With a balloon, monthly payments are lower than on a fully amortizing loan and a lump sum is due with the final payment. The calculator includes that lump sum in the total cost and the APR. Ask how you will pay or refinance the balloon at the end.
When the terms or amounts differ, the lower total cost is not automatically the better deal: a shorter loan costs less interest but asks for a higher payment. Compare the monthly payment and how long you plan to keep each loan too.
Check the numbers against your Loan Estimate
For a mortgage, your lender must give you a Loan Estimate within three business days of your application. The CFPB's Loan Estimate explainer shows where to find the rate, payment, points and fees, and the APR and total interest percentage in the "Comparisons" section of page 3. The Loan Estimate and your closing documents are what count. This calculator is for general information only and is not financial advice.
Frequently asked questions
Which is better, a lower rate or a lower APR?
For loans you keep to the end, the lower APR usually means the lower total cost, because it includes the fees. If you expect to sell or refinance early, check the break-even month: a loan with fewer upfront fees can win even when its APR is higher.
Why is my effective APR different from the APR on my Loan Estimate?
The lender follows the full Regulation Z rules: it counts only finance-charge items, uses its own payment dates and may treat some monthly charges differently. This page uses a simpler monthly model and includes every fee you type in. Use the lender's APR for the official figure and this page to see how fees change the comparison.
Should I add the fees to the loan or pay them at closing?
Rolling fees into the loan keeps your cash but means you pay interest on them, so the total cost is higher. Use the "Fees are" setting to compare both ways. Paying in cash lowers the loan and the interest but needs money on hand at closing.