How to compare two mortgage Loan Estimates: payment, points and time

A lower payment can require more cash upfront. In the fictional comparison below, Offer A saves $312 a month but requires $12,000 more in selected upfront costs. At two years, B uses less cash; at five years, A does. The useful question is how long you keep this loan, alongside what you can afford at closing.

Start with matching estimates

Request the same loan amount, term and product for the same home and down payment. Compare estimates issued close together: rates can change daily. Reconcile mortgage insurance and tax/insurance assumptions; a smaller escrow estimate does not establish cheaper financing. The CFPB's comparison guide explains these checks.

Record each offer's lock status and expiration. An unlocked rate can change; a lock also has conditions. Ask about extension costs if closing is delayed. A Loan Estimate is not loan approval. See the CFPB's rate-lock review.

One fictional home, two financing choices

Assume a $1,200,000 home, $240,000 down and a $960,000 conventional, fully amortizing 30-year fixed loan. Both fictional estimates are dated October 6, 2026, with identical 30-day locks, no mortgage insurance, no prepayment penalty and no balloon payment. No fees are financed.

Every rate and fee below is invented for this exercise, not a current quote or market average.

One point equals 1% of the loan amount. Points can buy a lower rate; rate-linked credits trade a higher rate for lower closing costs. The size of that trade varies. Request a zero-point, zero-credit alternative from each lender to help separate pricing from payment choices. CFPB guidance on points and credits explains why offers need a common basis.

These selected costs are not total closing costs or cash to close. Other services, transaction charges, prepaids and escrow deposits remain outside the table; actual amounts may differ. Cash to close also accounts for the down payment, deposits already paid, seller credits and adjustments. Reconcile the complete form using the CFPB Loan Estimate explainer.

Change the holding period, change the result

Using unrounded payments, A saves $312.17 monthly. Recovering its extra $12,000 through payment savings takes 38.4 months, or 39 scheduled payments. That is a simple cash-recovery calculation, not APR or a complete borrowing-cost comparison.

Here is principal-and-interest payments plus selected upfront costs, before repaying the remaining balance:

At two years, B uses $4,508 less cash. At five years, A uses $6,730 less. A planned early move or refinance reverses the five-year cash preference—but a refinance is an uncertain future option, not an assumed rescue.

Principal repayment matters too. A leaves a balance $2,126 lower after two years and $5,344 lower after five. Subtracting principal repaid from the cash totals gives interest plus selected fees: A costs $2,382 more at two years, but $12,074 less at five. Thus 38.4 months is not the point where interest-and-fee costs become equal.

The model assumes scheduled payments only and excludes other charges, payoff interest, taxes, returns on retained cash and refinancing costs. Compare the disclosed APR too. For the form's five-year borrowing cost, the CFPB explains how to subtract principal paid from the first “In 5 years” figure. Our limited model does not reproduce that disclosure.

Take one concrete question back to each lender

Ask: “For the same loan and lock period, show me the zero-point, zero-credit option, reconcile every cost difference, and compare total costs if I repay after two or five years. What changes if closing is delayed?”

Use the ownership-cost calculator to run each rate separately and record the results in your own two-column worksheet. Keep points, credits and the full cash-to-close reconciliation alongside it. For the wider budget, read costs beyond the mortgage; for comparing properties, see the worked two-home example.

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