Home Purchase Loan Comparison Calculator

Compare home-purchase loan scenarios by entering a loan amount, annual interest rate (APR), and term; the calculator estimates the monthly principal-and-interest payment and total interest. Use the same inputs for each loan scenario to see how changing the rate, term, or amount affects those two figures.

Formula

The calculator uses the standard fixed-rate, fully amortizing loan payment formula:

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

• P is the 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, calculated as years × 12.

Total interest is calculated as the rounded monthly payment multiplied by the number of payments, minus the original principal: Total interest = monthly payment × n − P. The displayed payment is rounded to cents before the total-interest calculation. This makes the estimate consistent with a schedule of equal monthly payments, although a lender’s exact figures may differ due to its precise payment schedule and rounding.

Worked Example

Using the calculator’s default values—$20,000 borrowed, 8% APR, and a 5-year term:

1. Convert the APR to a monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Convert the term to monthly payments: 5 × 12 = 60.
3. Apply the payment formula: $20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] ≈ $405.53 per month.
4. Calculate total interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

The estimate is therefore a monthly principal-and-interest payment of $405.53 and total interest of $4,331.80.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are equal, made monthly, and begin one month after the loan starts.
• Interest compounds monthly at APR ÷ 12.
• The calculation excludes fees, taxes, homeowners insurance, mortgage insurance, escrow, and other costs because they are not inputs.

How to Compare Home Purchase Loans

For a comparison, calculate each offer separately using its own principal, APR, and repayment term. Keep the loan amount and term identical when you want to isolate the effect of different rates. To compare term lengths, hold the amount and rate constant. Changing several inputs at once can make it harder to identify why the payment or interest total changed.

For example, a longer term generally spreads repayment across more months, which can reduce the scheduled monthly principal-and-interest payment while increasing the number of months on which interest accrues. A shorter term generally has fewer payments and may show a higher monthly payment. These are mathematical effects, not a judgment about which loan suits a particular buyer.

A purchase price is not necessarily the same as the loan amount. The principal is the amount borrowed, which may differ from the home’s price because of a down payment, financed costs, or other transaction details. Enter the principal you are comparing—not automatically the advertised purchase price.

What the Results Include—and Exclude

The payment shown is for principal and interest only. It is not a complete estimate of the monthly cost of owning a home. Property-related charges, insurance, mortgage insurance, association dues, and lender or closing costs are outside this calculation. Some may be collected with a monthly payment and some may be paid separately, depending on the transaction and servicing arrangement.

To compare full loan offers, use the lender’s written disclosures and ask which items are included in each quoted payment. Check that the principal, rate type, term, payment frequency, and any costs being financed are stated consistently. Fees can affect the overall cost even when two offers show the same principal-and-interest payment; this calculator does not convert fees into an APR or account for them.

Common Comparison Mistakes and Limits

• Comparing different loan amounts: A lower payment may simply reflect borrowing less. Compare matching principals when evaluating other terms.
• Confusing APR with the monthly rate: Enter APR as a yearly percentage, such as 8 for 8%. The formula converts it to a monthly rate. Do not enter 0.08 for 8%.
• Treating the result as the full housing payment: Taxes, insurance, mortgage insurance, and other housing costs are not included.
• Assuming every loan has a fixed rate: This formula assumes a fixed rate throughout the term. It does not model a rate that can change, a period of interest-only payments, or a balloon payment.
• Reading an estimate as an approval or quote: The calculation does not evaluate income, credit history, property value, eligibility, or lender requirements.

Rounding also matters. The calculator rounds the monthly payment to cents and uses that rounded amount in its total-interest estimate. Actual payment schedules can involve different rounding conventions, dates, or final-payment adjustments, so small differences are possible. The formula is not a comparison of all borrowing costs and cannot identify which offer is suitable for an individual situation.

Frequently Asked Questions

What information do I need to compare home loans?
For this calculator, enter the amount borrowed, annual APR, and term in years. For a fuller comparison, also review each lender’s disclosures for costs and payment components that this calculator does not include.

Is the monthly payment the same as my total mortgage payment?
No. It estimates principal and interest only. Taxes, insurance, mortgage insurance, escrow items, and other charges are excluded.

Why can a longer loan term have more total interest?
A longer term usually means more monthly payments and more time for interest to accrue. The calculator applies the same fixed APR throughout the selected term.

Can I compare adjustable-rate loans with this calculator?
Only as a simplified fixed-rate scenario. The calculator cannot model future rate changes, caps, adjustment dates, or other adjustable-rate features.

Does the result show what a lender will approve?
No. It is loan-payment arithmetic, not an eligibility or approval assessment. A lender determines its own terms and provides transaction-specific figures.

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

Related

• Karma Loan Comparison Calculator
• Loan and Debt Comparison Calculator
• Jumbo Loan Rates Comparison: How to Compare Offers

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2