Loan Comparison Calculator
APR assumes you keep the loan for thirty years. This also asks what happens if you do not.
3 quotes
Lender fees count toward APR; third-party fees — appraisal, title, recording — do not.
Assumptions
Lowest APR
Lender B
7.11% — assumes you hold to term
Cheapest over 4 years
Lender C
$116,936 all in
APR and your horizon disagree. APR spreads the finance charges across the full term. Lender B wins on APR and costs $2,588 more over the 4 years you expect to keep it.
| Lender A | $117,562$2,728.71/mo · 7.25% note · 7.29% APR · $3,900 at closing · +$626 vs cheapest |
|---|---|
| Lender B | $119,525Lowest APR$2,627.72/mo · 6.88% note · 7.11% APR · $11,900 at closing · +$2,588 vs cheapest |
| Lender C | $116,936Cheapest for you$2,661.21/mo · 7.00% note · 7.12% APR · $7,300 at closing |
| Cost per month held | $2,436.17 |
Estimates only. Which fees count toward APR is a regulatory question with edge cases; this splits them into lender charges and third-party charges and lets you place each one. Your Loan Estimate is the authoritative document. Not a loan commitment or an offer of credit.
APR answers a question you probably are not asking
APR exists for a good reason. Comparing a 7.25% quote with no points against a 6.875% quote with two points is not a comparison of rates, it is a comparison of two different financial structures, and the rate column alone cannot separate them. APR folds the finance charges back in and produces one number.
The assumption it makes to do that is the whole problem: it spreads those charges across the full term of the loan. Thirty years. Almost nobody keeps a mortgage for thirty years.
Look at the default quotes. Lender B has the lowest rate at 6.875% and the lowest APR at 7.11%. On the standard comparison it wins, and a Loan Estimate would show exactly that.
Now hold it for four years instead of thirty. Lender B costs $119,524. Lender C, with a worse rate and a worse APR, costs $116,936. The APR winner is $2,588 more expensive over the period you will actually own the loan, because the two points it charged never had time to earn their keep.
Drag the horizon slider out to fifteen years and the ordering flips back — Lender B becomes correct, as APR always said it would be. Neither number is lying. They are answering different questions, and only one of them is about you.
The practical rule: compare on cost over your horizon, use APR as a cross-check. When they disagree it almost always means one quote front-loads its cost, and the disagreement itself is information — it tells you the decision hinges on how long you stay, which is the input you should then think hardest about.
One honest limit. Which fees count toward APR is a regulatory question with genuine edge cases, and lenders do not always categorise identically. This tool splits them into lender charges and third-party charges and lets you place each one, rather than pretending the boundary is crisper than it is. Your Loan Estimate remains the authoritative document; this is for deciding what to do with three of them.
If the difference between quotes is really about points, the points calculator breaks that trade down directly. And if you are weighing a refinance rather than a purchase, the refinance calculator adds the term-reset problem this page does not cover.
Methodology
- APR is the rate that discounts the payment stream back to the amount financed, where the amount financed is the loan less the prepaid finance charges. Solved by bisection, which cannot diverge; returns blank rather than a fabricated rate when no solution exists.
- Finance charges = points + lender fees. Third-party fees are excluded from APR but included in cash at closing.
- Cost over your horizon = cash at closing + interest paid across the expected hold. Principal retired is equity, not cost, so it is excluded.
A quote with no finance charges has an APR equal to its note rate, which is a useful sanity check on the calculation and is asserted in the tests.
Not modelled: adjustable rates after the fixed period, mortgage insurance, lender credits, rate locks and extension fees, or the chance that a quoted rate is not the rate you are ultimately offered.
Frequently asked questions
- What is APR and how is it different from the interest rate?
- The note rate prices the loan. APR folds the finance charges — points, origination, underwriting — back into a single rate, so two quotes with different fee structures can be compared. It does a real job, and it does it under one assumption that is rarely true: that you keep the loan for its entire term.
- Why is APR misleading?
- Because spreading a $9,500 origination charge across thirty years barely moves the APR, while spreading it across the four years you actually own the house is a completely different number. APR is not wrong — it is answering a question about a thirty-year hold. If your hold is shorter, it is answering the wrong question.
- Which fees count toward APR?
- Broadly, charges you pay to get the loan: points, origination, underwriting, processing. Charges for services you would pay for anyway — appraisal, title, recording — generally do not. The boundaries have edge cases and vary by fee, so this tool splits them into lender charges and third-party charges and lets you place each one yourself.
- How should I actually compare quotes?
- On what each costs over the time you expect to keep the loan: cash at closing plus interest paid across that period. That is the figure this page ranks on. Use APR as a cross-check, and when the two disagree, understand why before choosing — usually it means one quote front-loads its cost.
- What if the quotes are close?
- Then stop optimising. Inside a few hundred dollars over your horizon, the difference is smaller than the error in your own estimate of how long you will stay. At that point pick on certainty of closing, responsiveness, and whether the lender has actually underwritten your file — all of which are worth more than the spread.
- Does a lower rate always mean a cheaper loan?
- No, and that is the case this tool is built for. A lower rate bought with points costs money up front to save money later, so it only wins if you stay long enough. On the default quotes the lowest rate has the lowest APR and is the most expensive option over four years.
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