Mortgage Comparison Calculator
✦ Finance & MoneyUse this mortgage comparison calculator to compare two mortgage offers side by side — full PITI payment, discount points break-even, PMI-drop month, APR and how much each offer costs over the years you plan to hold it.
- ✓ Calculated in your browser
- ✓ Nothing you type is stored
- ✓ No sign-up required
- ✓ Formula and sources shown
The formula
Level-payment amortization with Reg Z APR and PITI
PMT = P × [r(1+r)^n] / [(1+r)^n − 1] | PITI = PMT + tax/12 + ins/12 + PMI + HOA | APR: net_proceeds = PMT × [1 − (1+i)^−n] / iP = loan principal (home price − down payment + financed fees); r = annual rate ÷ 12; n = term in months. PMI is required when LTV > 80% and cancels automatically at 78% LTV of original purchase price per 12 U.S.C. §4902(b). Reg Z APR solves for the monthly rate i such that net proceeds equals the PV of payments; APR = i × 12. Horizon cost = PITI payments through year H + upfront fees + remaining balance — what a borrower who sells or refinances actually pays.
Calculating it by hand
- Enter the home price, down payment and interest rate for each offer.
- Enter the loan term (30 years and 15 years is the most common comparison).
- Add annual property tax and insurance — these are part of your monthly PITI payment.
- If one offer charges discount points, enter them as a positive number (e.g. 1 = 1% of the loan). Lender credits are negative (e.g. -0.5).
- Set the horizon — the years you plan to keep the mortgage before selling or refinancing.
- Read the PITI row: the full monthly cost including tax, insurance and PMI.
- Read the horizon cost row: this is what each offer actually costs over your hold period.
Worked examples
30-year vs 15-year at the same lender
Offer A: $400,000 home, 20% down ($80,000), loan $320,000, 6.75%, 30 years.r_A = 0.0675/12 = 0.005625; (1.005625)^360 = 7.5332; PMT_A = 320,000 × 0.005625 × 7.5332 / 6.5332 = $2,075.51/mo.No PMI (20% down). PITI_A = $2,075.51 + $350 (tax) + $125 (insurance) = $2,550.51.Offer B: same home and loan at 6.25% for 15 years. r_B = 0.0052083; (1.0052083)^180 = 2.5474; PMT_B = $2,743.75/mo; PITI_B = $3,218.75.Total interest A = $427,187.97; total interest B = $173,876.00 (the schedules' sums).Over a 7-year horizon: A costs $504,763 (PITI paid + balance still owed), B $477,240.
Offer A: PITI $2,550.51, 30-year interest $427,188. Offer B: PITI $3,218.75, 15-year interest $173,876. B saves $253,312 of interest and is $27,523 cheaper over 7 years, but costs $668.24 a month more.
1 discount point: break-even analysis
Both: $350,000 home, 10% down, loan $315,000, 30 years, $4,200 tax, $1,500 insurance, 0.85% PMI.Offer A: 7.00%, no points → PMT_A = $2,095.70.Offer B: 6.75% with 1 point = $3,150 at closing → PMT_B = $2,043.08.Monthly saving = $2,095.70 − $2,043.08 = $52.62; break-even = ceil($3,150 / $52.62) = ceil(59.9) = 60 months.The point counts as a prepaid finance charge, so B's Reg Z APR is 6.85%, not its 6.75% note rate.7-year horizon cost, including the $3,150: A $521,044, B $518,607.
The point breaks even on payments at month 60. Over 7 years Offer B is $2,437 cheaper; over 4 years the two are within $28, because the lower rate also repays principal faster.
10% vs 20% down: PMI effect
Offer A: $350,000, 10% down ($35,000), loan $315,000, 6.75%, 30 years → PMT $2,043.08.PMI at 0.85%: $315,000 × 0.0085 / 12 = $223.13 in month 1, charged on the falling balance until the scheduled balance reaches 78% of $350,000 ($273,000) — month 112 — $23,507 in all.PITI_A = $2,043.08 + $223.13 + $350 + $125 = $2,741.21.Offer B: $350,000, 20% down ($70,000), loan $280,000, 6.75%, 30 years → PMT $1,816.07; no PMI; PITI_B = $2,291.07.Monthly PITI saving with B: $450.14; 7-year horizon cost A $515,457 vs B $446,655 (B also starts with $35,000 less borrowed).
Offer B (20% down) costs $450.14 a month less and avoids $23,507 of PMI over 112 months; the extra $35,000 down is the trade.
Methodology
How mortgage comparison actually works
Most people compare mortgages by monthly payment alone — but the offer with the lower payment often carries heavier fees or a slower equity build. The figure that matters is what each offer costs over the years you actually plan to hold it.
Read sources and limitsHow should you compare two mortgage offers beyond the monthly payment?
A Loan Estimate has five numbers that matter for comparison: the rate, the APR, the monthly payment, the closing costs and the cash to close. The monthly payment leaves out what you pay on day one; the APR includes it but assumes you keep the loan to maturity. Most buyers sell or refinance well before that.
The figure that fits most buyers is the horizon cost: every payment through the year you expect to sell or refinance, plus the balance still owed then, plus points and upfront fees. It answers the real question — which offer leaves you better off on the day you leave.
This calculator shows all three metrics side by side, for both offers, so you can compare the 30-year total cost (relevant if you plan to stay forever) alongside the 7-year horizon cost (the US median mortgage tenure) alongside the monthly PITI. You set the assumptions; the tool shows the arithmetic.
What are discount points, and when does paying them make sense?
One discount point costs 1% of the loan at closing and typically lowers the rate by about 0.25 percentage points; your lender quotes the actual rate. Points pay off once the monthly saving has repaid the cost — the break-even month, month 60 in the second worked example. The points also count in the APR and horizon cost.
Lender credits are the reverse: the lender covers some of your closing costs in exchange for a higher interest rate. The trade-off is lower cash at closing but a higher monthly payment forever. If you plan to sell in three years, lender credits can reduce your total cost even though your rate is higher. This calculator shows the break-even month for each offer with points or credits, so you can read the answer directly against your expected hold period.
How does PMI change the comparison, and when does it drop?
Private mortgage insurance (PMI) is required on a conventional loan when the down payment is under 20% (LTV above 80%). It typically costs 0.2%–1.5% of the loan a year and adds straight to the monthly payment: 0.85% on $315,000 is $223.13 in the first month, money that builds no equity.
Under the Homeowners Protection Act (12 U.S.C. §4902(b)), your lender must automatically cancel PMI when your loan balance reaches 78% of the original purchase price, based on the amortization schedule. This calculator computes that month for each offer — month 112 for the third worked example — and charges PMI on the falling balance until then. An offer with a higher down payment that avoids PMI entirely can be more economical even at a higher interest rate — the breakdown bar and total cost columns make that comparison visible without arithmetic.
Is a 15-year or a 30-year mortgage the better deal?
A 15-year mortgage usually carries a lower rate than a 30-year and repays principal far faster, but the payment is typically 30%–50% higher. Whether it is worth it depends on the rate gap at your lender, the payment you can carry, and how long you will stay. The first worked example shows the trade-off in dollars.
Enter the 30-year offer as Offer A and the 15-year offer as Offer B with its rate. The calculator will show the monthly payment difference, the total interest saved over the life of the loan, and — most usefully — the horizon cost over a realistic hold period. Because the 15-year loan builds equity faster, its horizon cost (payments + remaining balance) is often lower than the 30-year even at a shorter hold period, once the monthly savings are added up.
Why does this calculator not compare adjustable-rate mortgages?
An adjustable-rate mortgage is fixed for an initial period, typically 5, 7 or 10 years, then resets each year to an index (usually SOFR) plus a margin, within caps. Its later payments are unknown, so a comparison that projects today's rate forward forever would flatter the ARM; this calculator does not make one.
If you are comparing an ARM in its fixed period to a fixed-rate mortgage, you can enter the ARM's current rate and set the horizon to the end of the fixed period — that comparison is valid. The tool is named fixed-rate and does not simulate post-adjustment payments; the guide says so explicitly so no reader is misled. For the adjustable period, use the CFPB's own ARM disclosure worksheets, which require your lender to show you the maximum possible payment under the caps.
Mortgage Comparison questions
What is the difference between P&I and PITI?
P&I (principal and interest) is the loan repayment portion. PITI adds property tax, homeowners insurance and — when down payment is under 20% — private mortgage insurance. PITI is the actual monthly cash outflow that matters for budgeting, and it is what lenders use to calculate your debt-to-income ratio. This calculator compares on PITI, not P&I alone, so the comparison reflects your real cost.
Should I pay discount points to lower my mortgage rate?
Paying points makes financial sense when you hold the mortgage long enough for the monthly savings to exceed the upfront cost — the break-even month. If you plan to sell or refinance before break-even, you lose money. The CFPB describes one point as roughly a 0.25% rate reduction (your lender quotes the exact figure). This calculator computes the break-even month directly, so you can read the answer against your expected hold period without further arithmetic.
What is the break-even on mortgage points?
The break-even on mortgage points is the number of months until the monthly savings from the lower rate equal the upfront cost. If 1 point costs $3,150 and saves $52.62 a month, break-even is ceil($3,150 / $52.62) = 60 months. That is the cash-flow answer; because the lower rate also pays principal down faster, the horizon cost (which counts the balance owed) can favour the points offer a little sooner. This calculator computes this exactly for your inputs and shows it in the points summary.
How does PMI affect the cost of a mortgage?
PMI is required on conventional loans when LTV exceeds 80% and typically costs 0.2%–1.5% of the loan per year. At 0.85% on a $315,000 loan that is $223.13 in the first month — about $2,680 in the first year, none of which reduces your balance. A larger down payment crossing 20% eliminates PMI entirely. This calculator adds PMI to your monthly PITI, shows the month it drops at 78% LTV, and includes it in all cost totals so you can compare offers with and without PMI honestly.
When does PMI drop off my mortgage?
Under the Homeowners Protection Act (12 U.S.C. §4902(b)), your servicer must automatically cancel PMI on the date your balance is scheduled to reach 78% of the original purchase price — based on the amortization schedule, not current market value. You may request cancellation at 80% LTV. This calculator shows the 78% automatic cancellation month for each offer so you can factor it into your total cost comparison.
Is a 15-year or 30-year mortgage better?
A 15-year mortgage almost always has a lower rate and builds equity twice as fast, but the payment is typically 30–50% higher. Whether it is better depends on whether you can afford the higher payment, how long you plan to stay, and what rate your lender actually quotes for each term. Enter both offers: the horizon cost row shows which is cheaper over your realistic hold period, accounting for the faster equity build of the 15-year loan.
What is a lender credit on a mortgage?
A lender credit (negative points) means the lender pays part of your closing costs in exchange for a higher rate. You pay less cash upfront but a permanently higher monthly payment. This calculator shows the break-even month: when the extra monthly cost has exceeded what the credit saved upfront. For short-term holders, lender credits often reduce total horizon cost despite the higher rate.
Why will this calculator not compare adjustable-rate mortgages?
Adjustable-rate mortgages reset based on an index (typically SOFR) plus a margin after their fixed period. Future payments are genuinely unknown — projecting the start rate forward misleads. If you want to compare an ARM in its fixed period, enter its current rate and set the horizon to end before the first adjustment. The comparison is valid only through that fixed period, which this page states explicitly.
Source notes
Method, sources & limitations
Every figure on this page comes from the formula above applied to the values you enter. Nothing is estimated from market data, and no result is a forecast. These are the sources behind the method and any fixed figures it uses:
- CFPB — Regulation Z / TILA (12 CFR Part 1026, Appendix J — actuarial APR method)
- CFPB — What are discount points and lender credits?
- CFPB — Owning a Home: Loan Estimate comparison guidance
- 12 U.S.C. §4901–§4910 — Homeowners Protection Act (PMI automatic cancellation at 78% LTV)
- Federal Reserve — Consumer's Guide to Mortgages (amortization and PITI)
Educational information only. Results are estimates produced from the assumptions you enter, and are not financial, tax, legal or medical advice. Check anything that matters against a qualified professional and the cited sources.