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Fixed-rate loan comparison calculator

Our loan comparison calculator is designed to show you when the costs of your two fixed-rate loan options are the same — also known as the break-even period. So whether you stay in your home for 5 years, or 25, you’ll have all of the info you need to make the right decision about which loan is right for you.

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Break-even period

After 9 years 2 months, Option A will be less expensive than Option B

When we took into account upfront costs and interest, both options cost the same at the 9 year 2 month mark. If you plan to own your home less than 9 years 2 months, Option B is a better choice.

Option A

2.625%

Loan term

30-year fixed

Points

$5,812

Monthly payment

$1,607
Lifetime cost
$584,189

Option B

2.750%

Loan term

30-year fixed

Points

$2,924

Monthly payment

$1,633
Lifetime cost
$590,791

How to choose a home loan

It can be overwhelming to evaluate your home loan options, but it doesn't have to be. As it turns out, there are a few important numbers you can focus on first. Our loan comparison calculator takes into account the length of a loan, as well as the interest rate, loan amount, and whether you'll have points or credits. Once you've decided to go with a fixed rate instead of an adjustable one, you'll want to start to consider all of those details. We're here to help them make a little more sense along the way.

First up, you'll want to think about the term. In other words, would you like to make smaller payments over a longer amount of time? Or would you prefer to make larger payments, but over a shorter period of time? The loan amount could vary too, based on how much of your assets you're willing to use for a down payment. Trying out both options show you how much you save each month, as well as over time, so it's easier to weigh the benefits.

Some of the most confusing factors you'll tackle when you're comparing loan options are the interest rate and points and credits. Luckily, they're closely connected to one another. Once you understand that relationship, they're easier to compare. Basically, most loan options will have the option of either points or credits, and that has an effect on the interest rate that's available to you. When you choose a loan option with points, you're opting to pay more upfront at closing in exchange for a lower interest rate. So while your costs are higher at first, you may notice you pay less in interest over the life of the loan. On the other hand, choosing a loan option with credits means you'll save some money upfront on closing costs in exchange for a higher interest rate. This is a great option if you're hoping to keep costs lower at first, but it does cost more over time.

All of these factors work together, so it's best to compare their effects over time by using a tool like our calculator that stacks them against each other. At the end of the day, a major question you'll need to tackle is: how long do you plan to stay in your new home? For example, if you plan to sell or refinance before your break-even period (the point at which both loan options cost the same), you'll want to choose the loan option that costs less in the short term. However, if you plan to stay in that home for the life of the loan, you might care a little less about the short-term costs, and instead you will want to pay more attention to how the costs shift after that break-even period. In other words, which loan option costs less during the time you'll be living in the home, or before you refinance?

If you're comparing drastically different fixed-rate loan options — with varying terms and amounts, for example — you may not have a break-even period at all. In those cases, you'll also want to think about how long you plan to stay in the home, as well as which option is more financially feasible for you.

The mortgage you choose today will impact your finances for years to come. It will determine your upfront expenses, monthly payments, and long-term costs. But, don’t worry. Our fixed-rate loan comparison calculator will crunch the numbers for you so that you can choose the right home loan for your needs.

Why your loan options matter

Mortgages come in all shapes and sizes. Your loan term, interest rate, and points or credits will significantly affect your monthly mortgage and long-term costs. Let’s review why each loan option matters.

Your loan term

Your loan term is the length of your mortgage. It helps determine your monthly payment and how much interest you’ll pay throughout the loan. Common fixed-rate mortgages include 15-, 20-, or 30-year terms.

The shorter the term, the quicker you’ll pay off your mortgage, which means you’ll pay less in interest. However, each monthly payment will be larger because you’ll have a shorter time frame to pay. On the other hand, a longer-term may provide you with a more affordable monthly mortgage. But it also means you’ll be paying more in interest over time.

A mortgage comparison calculator can help you determine how each home loan may fit into your budget now and in the future.

Your interest rate

Your mortgage interest rate is the amount you pay a lender for providing you the money to buy your home. Interest rates are expressed as a percentage, and the higher the rate, the more you’ll pay.

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Mortgage interest rates are impacted by several factors that your lender will weigh, including:
Your credit score

Your credit score tells lenders how risky it might be to issue you a mortgage

A higher score indicates that you have a good history of paying back your debts on time. This will qualify you for a lower interest rate because it shows you're likely less of a risk to lenders. A lower credit score means more risk for lenders, and that means you’ll probably pay a higher rate

It’s a good idea to improve your credit score as much as possible before shopping for a home loan. That way, you have a better shot at obtaining a lower interest rate.
Your loan-to-value ratio
Your loan-to-value ratio measures how much you need to borrow versus what the property is worth. For example, if you take out a $160,000 mortgage on a $200,000 house, your loan-to-value ratio is 80%. The lower your ratio, the less risk your lender takes on because it will be easier for them to recoup more of their money if you default.

When you present less risk to a lender, you’re more likely to get a lower interest rate. To reduce your loan-to-value ratio (and possibly your rate), consider making a larger down payment or purchasing a less expensive home.

The economy and inflation

While we won’t get into the nitty-gritty here, it’s important to know that mortgage interest rates are greatly impacted by what’s going on in the financial markets. Economic factors, such as U.S. economic growth, monetary policy, the bond market, housing market conditions, and inflation can all affect rates. Learn more about how the economy impacts rates here.

Your points or credits decision

Both points and credits may help you save money on your mortgage, but they do so in different ways. When you purchase mortgage points, you’ll pay more at the closing table in exchange for a lower interest rate. This can provide you with significant savings throughout your mortgage, as a lower rate means you’ll pay less in interest over time.
On the other hand, when you accept lender credits, you can decrease or eliminate your upfront closing cost. The catch? You agree to a higher interest rate for the term of your loan.
So, how do you decide if points or credits are right for you? Typically, if you plan to stay in your mortgage for many years, buying points could save you significant money on interest overall. Conversely, if you plan to sell or refinance in the next few years, choosing lender credits and saving money upfront may make more sense. Our fixed-rate loan comparison calculator can show you how both would impact your mortgage over time.

How a mortgage comparison calculator can help you choose a home loan

A mortgage comparison calculator factors in all the details about two home loans you’re considering and helps highlight the best financial choice for your situation. Here’s how:

It helps you compare mortgages with different terms and costs

If you’re comparing mortgages with varying lengths and expenses, it can be tough to tell which costs more in the short- and long-term. A calculator simplifies the process and shows you what each home loan will cost you upfront, every month, and over time. This helps you see how a particular mortgage would fit into your financial picture at different points.

It acts as a loan interest calculator

A mortgage interest calculator is different from a simple interest calculator because it has a built-in amortization schedule. With a simple-interest loan, the amount you’ll pay in interest stays the same for every payment you make.
But, with a mortgage, the amount of your payment that goes toward interest will decrease over time. Gradually, more and more of your payment will go toward the principal. When you look at the amortization schedule for your loan, you’ll see exactly how each payment will get split between principal and interest. By using the loan comparison calculator, you’ll have a better awareness of what it will cost to borrow the money.

It helps you calculate the lifetime loan amount

The sum you borrow to cover the sale price of your new home is different from the lifetime cost of your mortgage. That's because your lifetime loan amount includes the principal (the amount to cover the home purchase), interest (what you pay the lender), and points or credits (which help you save money at closing or in interest). A loan comparison calculator considers all of these expenses and can help you understand your total cost to become a homeowner.

It shows your break-even point

The break-even point is when the two mortgages you’re comparing will cost you the same amount of money. This is important because it can help you determine which loan makes the most sense based on your plans.

If you believe you’ll sell or refinance your home before you reach the break-even point, then the loan that costs less before that mark may make more financial sense. But, if you think you’re buying your forever home and don’t plan to refinance, then choosing the home loan with the lowest long-term costs may save you the most over time.

Note that you may not have a break-even point if the two mortgages you’re comparing have drastically different loan terms or amounts. In this case, you should select the best option for your financial situation.

How to determine which home loan is right for you

Choosing a home loan can feel like an overwhelming experience because there are many moving parts. Fortunately, a mortgage calculator can help you assess your options by allowing you to play with the parameters, such as the loan amount, interest rate, loan term, and points or credits.

When reviewing your mortgage options, you’ll want to consider the following:

  • How your mortgage will fit into your monthly budget. This can help answer the question, “how much home can I afford?
  • Your savings, which can help determine your down payment and ability to purchase mortgage points.
  • Your future plans, especially how long you expect to live in the home.

It’s important to note that what you see in the mortgage comparison calculator may vary from your actual mortgage figures. However, having a visual that shares how different mortgages affect your short- and long-term costs can help you narrow down the right option.

The next step

Once you’ve compared different loan scenarios and have a better idea of which mortgage might be right for you, it’s time to get pre-approved. A mortgage pre-approval can help you more thoroughly understand your budget and how much of a mortgage you’ll likely be able to receive. Plus, pre-approvals can give you an edge once you make an offer because it will show sellers you’re a serious buyer.
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Disclaimer: This home affordability calculator is made for illustrative purposes only. Accuracy is not guaranteed.

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