Home Loan Comparison Calculator: Compare Payments and Cost

A home loan comparison calculator estimates and compares the monthly principal-and-interest payment and total interest for two mortgage scenarios. Enter each loan’s amount, annual APR, and term to see how the figures differ; the estimate does not include taxes, insurance, or lender-specific charges.

Formula

The calculator computes a level monthly payment for each loan, then subtracts Loan 2’s payment from Loan 1’s. A positive difference means Loan 1’s estimated payment is higher; a negative difference means it is lower.

Monthly payment: M = round(P × r ÷ [1 − (1 + r)⁻ⁿ], 2), where r = APR ÷ 1200 and n = years × 12. Total interest: I = M × n − P. The comparison output is M₁ − M₂.

• P is the loan principal in dollars, not necessarily the home’s purchase price.
• APR is entered as a percentage per year; for example, 6.5 means 6.5%.
• r is the monthly rate as a decimal.
• n is the number of monthly payments.
• M is the monthly principal-and-interest payment, rounded to cents.
• I is estimated total interest over the full term, using that rounded payment.

The first result is deliberately the payment difference, the central comparison requested by this calculator. The two interest outputs provide context, but neither is a full measure of mortgage cost: fees, mortgage insurance, and other ownership expenses are not calculated.

Worked Example

Using the defaults, both loans have a principal of $300,000 and a 30-year term, or 360 monthly payments. Loan 1 has a 6.5% APR; Loan 2 has a 6% APR.

1. Convert each APR to a monthly decimal rate: r₁ = 6.5 ÷ 1200 = 0.005416667; r₂ = 6 ÷ 1200 = 0.005.
2. Apply the payment formula for Loan 1: $300,000 × 0.005416667 ÷ [1 − (1.005416667)⁻³⁶⁰] = $1,896.20 per month, rounded to cents.
3. For Loan 2: $300,000 × 0.005 ÷ [1 − (1.005)⁻³⁶⁰] = $1,798.65 per month, rounded to cents.
4. Subtract: $1,896.20 − $1,798.65 = $97.55. Loan 1’s estimated monthly principal-and-interest payment is $97.55 higher.
5. Loan 1 interest: $1,896.20 × 360 − $300,000 = $382,632.00. Loan 2 interest: $1,798.65 × 360 − $300,000 = $347,514.00.

Assumptions

• Each loan has a fixed APR and equal monthly payments throughout the entered term.
• Payments are assumed to occur monthly, with the first payment one month after borrowing.
• Interest is modelled monthly at APR ÷ 12; the calculation does not model daily accrual or a lender’s specific payment conventions.
• Outputs exclude origination and other fees, taxes, homeowners insurance, mortgage insurance, escrow, and any costs of buying or owning a home.
• The comparison assumes each entered principal is fully repaid on schedule, with no extra payments, missed payments, or balloon balance.

When a Home Loan Comparison Helps

Use the calculator to isolate how principal, APR, and term affect a standard amortizing loan. To make a useful like-for-like comparison, enter the same principal and term in both cases when those are the same in the offers you are assessing. If terms differ, the payment comparison is still valid as arithmetic, but it combines the effect of the rate and repayment period.

A lower monthly payment does not automatically mean lower borrowing cost. A longer term spreads repayment over more months and can reduce the required payment while increasing total interest. Conversely, shortening the term often raises the scheduled monthly payment while reducing the number of months in which interest accrues. These outputs describe the entered scenarios; they do not determine whether either payment fits a household budget.

How to Compare Loan Scenarios

• Use comparable principal amounts. Enter the amount borrowed, after any down payment, rather than the property’s entire price if the loan is smaller.
• Check the APR and its basis. Enter a percentage, not a decimal: use 6.5 for 6.5%, not 0.065. Obtain the relevant rate and loan terms directly from the lender’s written information.
• Match the term to the offer. The calculator converts years into monthly payments. A term stated in months should be converted to years before entry; for example, 360 months is 30 years.
• Compare charges separately. Ask for the lender’s itemized estimate of fees and any required insurance or escrow amounts. They can change cash needed at closing or monthly housing outlay without changing this principal-and-interest calculation.

For example, comparing two loans at the same principal and term helps show the payment effect of different APR inputs. Comparing a 15-year scenario with a 30-year scenario also changes the repayment schedule, so the payment difference cannot be attributed to APR alone.

What the Results Leave Out

This is a mathematical estimate for a conventional fixed-rate, fully amortizing payment pattern. It is not a complete mortgage quote or a personalized financial recommendation. A quoted APR may reflect specific loan features or charges, and lenders may present payment figures under conventions that differ from the calculator’s assumptions. Use the lender’s disclosure for the actual offer details.

Rounding matters over a long term. The calculator rounds each monthly payment to the nearest cent and multiplies that rounded figure by the number of months to estimate interest. A lender’s final payment or payoff balance can differ because of its rounding, payment dates, servicing practices, or fees. The displayed difference is specifically Loan 1 minus Loan 2, so a negative result is not an error.

Frequently Asked Questions

Does a lower monthly payment mean a cheaper home loan?
No. The payment shown covers principal and interest only. A longer term can lower the scheduled payment but increase total interest, and costs excluded here may affect the overall amount paid.

Should I enter the interest rate or APR?
Enter the annual percentage rate shown for the scenario you are modelling. The formula treats it as a nominal annual rate divided by 12. If a lender’s quoted figure is defined differently, confirm the appropriate comparison basis with that lender.

Does this calculator include property taxes or insurance?
No. It estimates principal and interest only. Taxes, homeowners insurance, mortgage insurance, escrow deposits, and lender fees must be considered separately using figures supplied for the specific situation.

Why can a longer-term loan have more total interest?
With more scheduled payments, the outstanding balance is repaid over a longer period and interest is calculated over more months. The exact result depends on the principal, APR, and term entered.

Can I use it to compare a fixed-rate and adjustable-rate mortgage?
Only as a simplified snapshot using the entered APR as if it stayed fixed for the full term. An adjustable rate can change, so this calculator cannot predict later payments or total interest for that loan.

This result is an estimate, and the lender’s disclosure gives the exact figures.

Related

• M&T Installment Loan Payment Calculator
• MDG Installment Loan Payment Calculator
• Online Installment Loan Calculator and Payment Guide

in p1 | Loan 1 amount | $ | 300000 | 1 | 100000000
in apr1 | Loan 1 APR | % | 6.5 | 0.01 | 100
in yrs1 | Loan 1 term | years | 30 | 0.0833 | 50
in p2 | Loan 2 amount | $ | 300000 | 1 | 100000000
in apr2 | Loan 2 APR | % | 6 | 0.01 | 100
in yrs2 | Loan 2 term | years | 30 | 0.0833 | 50
out diff | Monthly payment difference (Loan 1 minus Loan 2) | $ | round(p1 * (apr1 / 1200) / (1 - (1 + apr1 / 1200) ^ -(yrs1 * 12)), 2) - round(p2 * (apr2 / 1200) / (1 - (1 + apr2 / 1200) ^ -(yrs2 * 12)), 2) | 2
out int1 | Loan 1 total interest | $ | round(p1 * (apr1 / 1200) / (1 - (1 + apr1 / 1200) ^ -(yrs1 * 12)), 2) * yrs1 * 12 - p1 | 2
out int2 | Loan 2 total interest | $ | round(p2 * (apr2 / 1200) / (1 - (1 + apr2 / 1200) ^ -(yrs2 * 12)), 2) * yrs2 * 12 - p2 | 2