Mortgage comparison calculator

Mortgage Rate Change Calculator

Compare two fixed mortgage rates on the same remaining balance and term. The calculator shows how the rate difference changes estimated monthly principal and interest, annual payments, remaining interest, and a simple cost break-even. It models a scenario—it does not predict mortgage rates or lender approval.

Estimated payment difference$147.52 less per month

75 basis points lower on the same balance and remaining term

Current principal and interest: $2,160.66
New principal and interest: $2,013.14
Annual payment change: −$1,770.27
Remaining interest change: −$44,256.73
Modeled benefit after entered costs: +$39,256.73
Simple cost break-even: 34 months

Principal and interest only. Taxes, property insurance, mortgage insurance, HOA dues, points, lender credits, escrow changes, and a refinanced term or balance can change the real result.

Formula and method

For each rate, Kalcue uses the standard fixed-payment amortization formula: M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1]. P is the remaining principal, r is the annual note rate divided by 12 and 100, and n is the remaining number of monthly payments. At a 0% rate, M equals P ÷ n.

Remaining interest is M × n − P. Kalcue subtracts the current result from the new result to show signed payment and interest changes. Simple break-even is entered upfront costs ÷ monthly payment reduction, rounded up to the next whole month.

Worked example

For a $320,000 remaining balance with 25 years left, the estimated principal-and-interest payment is $2,160.66 at 6.50% and $2,013.14 at 5.75%. That is about $147.52 less per month and $44,256.73 less interest over the unchanged remaining term.

With $5,000 of entered upfront costs, the simple payment-savings break-even is 34 months, and the modeled remaining-interest benefit after those entered costs is $39,256.73. Actual offers can differ.

The Fed does not directly set mortgage rates

The Federal Open Market Committee sets a target range for the federal funds rate, an overnight rate—not a consumer mortgage rate. The Federal Reserve Bank of Atlanta explains that mortgage rates are more closely associated with longer-term rates such as Treasury yields and can sometimes move differently from short-term policy rates. This tool therefore asks you to enter a mortgage rate to compare instead of assuming a Federal Reserve move passes through one-for-one.

What this comparison includes—and leaves out

The comparison holds the remaining principal and term constant and models fully amortizing, fixed-rate monthly payments. It does not change the balance, restart the term, or model an adjustable-rate schedule. It also excludes escrow, property taxes, homeowners insurance, mortgage insurance, HOA dues, points, lender credits, and financing costs into the new balance.

The Consumer Financial Protection Bureau notes that a typical total mortgage payment can be higher than principal and interest and recommends comparing multiple Loan Estimates, including upfront loan costs and the five-year cost of borrowing. The optional cost field here is only a simple screen; it is not a substitute for those disclosures.

Interest rate is not the same as APR

The interest rate is the yearly price of borrowing before fees. APR is a broader cost measure that includes the interest rate and certain points, broker fees, and other charges. Use the fixed note interest rate in this calculator, then use APR and the Loan Estimate comparison figures to evaluate the wider cost of an actual offer.

Frequently asked questions

If the Fed cuts rates by 0.25 percentage point, will mortgage rates fall by 0.25 point?

Not necessarily. The Federal Reserve sets a target range for the overnight federal funds rate, not consumer mortgage rates. Mortgage rates are market rates influenced indirectly by monetary policy and by longer-term yields, inflation expectations, lender capacity, borrower risk, and other conditions, so they can move by a different amount or in a different direction.

Will the rate on my existing fixed-rate mortgage change automatically?

No. The rate and principal-and-interest payment on a fixed-rate mortgage stay fixed under the loan contract. Getting a different fixed rate generally requires a new loan or refinance; an adjustable-rate mortgage changes only under its own index, margin, timing, and cap rules.

Does this calculator include taxes, insurance, or mortgage insurance?

No. It compares principal and interest only. Your total housing payment may also include property taxes, homeowners insurance, mortgage insurance, HOA dues, and other charges that do not automatically change with the mortgage rate.

Should I enter the interest rate or APR?

Enter the note interest rate. APR is a broader measure that includes the interest rate plus certain points, broker fees, and other charges, so using APR in this payment formula would not reproduce a lender's scheduled principal-and-interest payment.

Does a lower payment prove that refinancing is worthwhile?

No. A refinance can change the loan balance or term and can include points, lender fees, third-party costs, prepaid interest, and other charges. Use the optional cost field only as a simple screen, then compare official Loan Estimates for the same loan type and timeframe.

Official sources and review

Formula, source claims, worked example, and explanatory content reviewed August 31, 2026. See the Kalcue methodology and editorial policy.