How it works
Use the same loan amount for both offers. Enter each nominal rate, full term and fees paid upfront. The comparison shows principal and interest only so differences in tax or insurance assumptions do not make one loan look artificially cheaper.
Formula
ΔC = (Σ Mₐ + Offer A upfront fees) − (Σ Mᵦ + Offer B upfront fees).
Worked example
For the same 320,000 principal, offer A at 6.5% over 30 years has a payment of $2,022.62. Offer B at 6% over 15 years has a payment of $2,700.34. With upfront fees of 2,000 and 3,000 respectively, the full-term cost difference (A minus B) is $241,080.83.
Assumptions and limitations
A positive difference means offer A costs more over its modeled full term. This is not an APR calculation or an equal-holding-period comparison. It excludes early sale, refinancing, rate changes, penalties, tax effects, insurance and investment returns on payment differences.
Local rates and lending rules
Enter a lender’s nominal interest rate, not APR. This model divides it by 12 and assumes monthly payments. Fees, eligibility, compounding conventions and tax rules vary by country.
Sources and methodology
- CFPB — Principal, interest and total monthly payment
- CFPB — Understanding a Loan Estimate
- CFPB — Debt-to-income ratio
- CFPB — Compare loan offers
Sources checked 2026-10-26
Frequently asked questions
Should I choose the offer with the lowest total?
The total assumes you keep the loan until it is fully repaid. Also compare payment comfort, fees, contractual terms and your expected holding period. The calculator does not make a personal recommendation.
Amounts are illustrative. Not financial advice or a lender quote.