Mortgage rate change payment calculator

Change only the interest rate while keeping the loan amount and repayment term steady. This separates the payment effect of a rate change from changes in principal, closing costs, or loan duration. The calculator shows the payment under each rate, the monthly and annual difference, and the change in scheduled full-term interest.

Worked example from an official source

Source: Federal Reserve payment example.

Make the comparison consistent

Enter one principal amount and one term for both scenarios. Enter the two annual fixed interest rates you want to compare. The CFPB payment explanation describes how amount, rate, and term determine the payment. Holding two of those inputs constant makes the rate effect easier to inspect. This is useful when comparing two documents that otherwise describe the same loan or when looking at how two saved survey observations would affect a hypothetical payment. The rate change is an input to the calculation, not a forecast.

Read the sign of the result

The payment change subtracts the first-rate payment from the second-rate payment. A positive result means the second rate has a higher principal and interest payment. A negative result means it has a lower one. Annual payment change is the monthly difference multiplied by the number of monthly payments in a year. It is not a prediction of next year's mortgage costs. Full-term interest change uses the same subtraction direction, so you can read the sign consistently across the result cards.

Distinguish rate points from payment dollars

The difference between two entered interest rates is measured in percentage points. The change in a mortgage payment is measured in dollars and depends on principal and term as well as that rate difference. This tool does not assume that a given rate movement always produces the same dollar effect for every loan. Change the amount or term and recalculate to inspect the effect for your own comparison. The published Federal Reserve example below gives source inputs and rounded payments; the working tool uses unrounded arithmetic and displays cents.

Keep fees separate from the rate calculation

A rate-only comparison does not capture upfront points or closing costs. Use the mortgage points tool if the two rates are associated with different discount point charges. Use the refinance tool if you are replacing an existing balance and want to include upfront costs or a different remaining term. This calculator intentionally compares the same amount over the same repayment period. It does not model cash out, a changing adjustable rate, interest-only payments, balloon payments, or a partial payoff. Those changes require additional inputs beyond the rate difference.

Read the full-term assumption

The scheduled interest result assumes you make the fixed principal and interest payment until the loan ends. It excludes extra principal payments, early payoff, taxes, insurance, and tax effects. A lower interest rate reduces scheduled interest under the same amount and term, but that result alone cannot tell you whether a particular refinance is worthwhile after fees. The Federal Reserve refinancing guide explains why costs and the time you expect to keep a loan matter. Use actual loan inputs for a document comparison and the weekly history table for national survey context.

How it works

P is the borrowed principal, M is the monthly principal and interest payment, r is the monthly interest rate, and n is the number of monthly payments. At a zero interest rate, M = P / n. The CFPB payment explanation describes a fixed-rate payment that fully repays the loan by the end of its term. This is the standard amortization formula for that payment.

Monthly change = second-rate payment - first-rate payment. Annual change = monthly change * 12. Full-term interest change = second-rate interest - first-rate interest, with interest = payment * number of payments - principal. The Federal Reserve payment example compares payments with rate as the changing input.