Home Loan Comparison Calculator: Compare Monthly Payments

This home loan comparison calculator estimates and compares monthly principal-and-interest payments for two fixed-rate loans. Enter each loan’s amount, APR, and term to see the payment and total interest for each, plus the difference between them.

Formula

For each loan, the calculator treats the balance as a fixed-rate loan repaid in equal monthly payments. Its monthly payment is:

M = round(P × r ÷ [1 − (1 + r)⁻ⁿ], 2)

• M is the monthly principal-and-interest payment, in dollars.
• P is the starting loan principal, in dollars.
• r is the monthly interest rate, calculated as APR ÷ 1,200. APR is entered as a percentage per year.
• n is the number of monthly payments: years × 12.

Total interest is estimated as M × n − P, using the payment rounded to cents. The headline difference is Loan B’s unrounded-to-cents payment minus Loan A’s payment; a positive result means B’s estimated payment is higher. The calculator does not rank loans or determine which terms suit a particular buyer.

Worked Example

Using the default inputs, both loans have a $300,000 principal and 6.5% APR. Loan A runs 30 years; Loan B runs 15 years.

1. Convert APR to a monthly rate: 6.5 ÷ 1,200 = 0.0054166667.
2. Convert the terms to payments: Loan A has 30 × 12 = 360 payments; Loan B has 15 × 12 = 180.
3. For Loan A, calculate $300,000 × 0.0054166667 ÷ [1 − (1.0054166667)⁻³⁶⁰] = $1,896.20 per month after cent rounding.
4. For Loan B, calculate $300,000 × 0.0054166667 ÷ [1 − (1.0054166667)⁻¹⁸⁰] = $2,613.44 per month after cent rounding.
5. Payment difference: $2,613.44 − $1,896.20 = $717.24 per month. Loan A’s estimated total interest is $1,896.20 × 360 − $300,000 = $382,632.00.

Assumptions

• Each loan has a fixed APR and equal monthly payments throughout its stated term.
• Payments occur monthly, with the first payment one month after the loan begins.
• Interest is modelled monthly at APR ÷ 12; this is a simplified calculation, not a lender’s full amortization schedule.
• Down payment, closing costs, fees, taxes, insurance, PMI, escrow, and any rate changes are not included.

How to Compare Home Loans

A loan comparison is useful only when the inputs describe comparable borrowing scenarios. Start with lender-provided figures for principal, APR, and term. The APR and interest rate are not always interchangeable in loan paperwork: APR may incorporate certain borrowing costs, while the calculator uses the entered APR as if it were the rate applied to the outstanding balance. For an exact payment estimate, use the rate and payment terms specified in the lender’s disclosure and account separately for quoted costs.

• Compare the same amount borrowed to isolate the effect of rate and term. If down payments differ, the resulting loan principals differ too.
• Compare the same term to focus on payment differences associated with the rate, or compare different terms when the length of repayment is the point of the comparison.
• Include the full payment picture separately. A mortgage payment may be accompanied by property taxes, homeowners insurance, mortgage insurance, association charges, or escrow deposits; none is calculated here.
• Review upfront and recurring costs. Points, lender charges, and other costs may affect the overall cost even when the principal-and-interest payment looks similar. Obtain these figures from the lender rather than assuming them.

For example, with the same principal and APR in the worked example, the 15-year loan has a higher monthly payment but fewer scheduled payments than the 30-year loan. That illustrates a trade-off in the arithmetic: payment size and total interest depend on both the rate and repayment period. It does not establish which choice is appropriate for any buyer.

Reading the Results and Common Pitfalls

The payment difference is directional: positive means Loan B’s monthly principal-and-interest payment exceeds Loan A’s; negative means it is lower. It is not the difference in total borrowing cost. The displayed total interest is provided only for Loan A, and it is calculated from its rounded monthly payment. To compare total interest for Loan B, apply the same formula using its payment and number of months: payment × months − principal.

Do not interpret the payment as a complete housing budget or an approval estimate. Lenders may use additional information and calculations, and the calculator does not model them. Small discrepancies against a lender’s quote can result from rounding conventions, payment dates, fees included in APR, or a different interest calculation method. A term entered as years is converted to whole monthly payments by multiplying by 12; the calculator accepts fractional years, so check that the resulting term matches the offer being compared.

Other Costs and Limits

This is a comparison of fixed-rate amortizing loan arithmetic, not a quote. It assumes the entire stated principal is repaid through equal payments and does not model adjustable rates, interest-only periods, balloon payments, extra principal payments, skipped payments, or refinancing. It also does not calculate cash needed at closing, the impact of points, or a break-even period for paying upfront charges.

For a fuller comparison, gather the same categories of information for each offer: amount financed, interest rate and APR, term, monthly principal-and-interest payment, lender-listed costs, and any payment components outside principal and interest. Ask the lender to explain how its quoted payment and APR were calculated. Do not infer current rates, eligibility, or program terms from this example; use the figures applicable to the offer you are examining.

Frequently Asked Questions

What is the difference between a mortgage rate and APR?
In general, the interest rate is the rate used to calculate interest on the loan balance, while APR is a broader measure that may reflect certain borrowing costs. Definitions and included charges can vary, so check the lender’s disclosure. This calculator uses APR as the rate input for its simplified payment formula.

Does this calculator include property taxes and homeowners insurance?
No. It estimates principal and interest only. Taxes, insurance, mortgage insurance, escrow, and other housing expenses need to be considered separately using figures from their respective providers or disclosures.

Why can a shorter home loan have a higher monthly payment?
The principal is repaid over fewer monthly payments, so each payment must cover a larger share of the balance, as well as interest. The result depends on the loan amount, APR, and term.

How do I compare loans with different down payments?
Enter the amount actually borrowed for each loan. A different down payment changes the principal, so the comparison reflects both the loan size and the other inputs. Review upfront cash and other quoted costs separately.

Why does this payment differ from a lender’s quote?
The calculation is simplified and may treat APR as the balance interest rate. A lender’s figure can use different rate and fee details, timing, or rounding. Check the lender’s payment disclosure for the applicable amount.

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

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in p1 | Loan A amount | $ | 300000 | 1 | 100000000
in apr1 | Loan A interest rate (APR) | % | 6.5 | 0.01 | 100
in yrs1 | Loan A term | years | 30 | 0.0833 | 50
in p2 | Loan B amount | $ | 300000 | 1 | 100000000
in apr2 | Loan B interest rate (APR) | % | 6.5 | 0.01 | 100
in yrs2 | Loan B term | years | 15 | 0.0833 | 50
out diff | Monthly payment difference (Loan B minus Loan A) | $ | round(p2 * (apr2 / 1200) / (1 - (1 + apr2 / 1200) ^ -(yrs2 * 12)), 2) - round(p1 * (apr1 / 1200) / (1 - (1 + apr1 / 1200) ^ -(yrs1 * 12)), 2) | 2
out pay1 | Loan A monthly payment | $ | round(p1 * (apr1 / 1200) / (1 - (1 + apr1 / 1200) ^ -(yrs1 * 12)), 2) | 2
out int1 | Loan A total interest | $ | pay1 * yrs1 * 12 - p1 | 2
out pay2 | Loan B monthly payment | $ | round(p2 * (apr2 / 1200) / (1 - (1 + apr2 / 1200) ^ -(yrs2 * 12)), 2) | 2