The short answer
First confirm both Loan Estimates describe the same loan amount, loan type, and term, and note whether and until when each rate is locked. Then compare origination charges, points and lender credits, mortgage insurance, the monthly payment, and cash to close. Different tax, insurance, or escrow figures are estimates, not proof that one lender is cheaper.
Make sure you are comparing the same loan
- Loan amount. A different amount changes the payment, the fees, and sometimes the pricing.
- Loan type and product. Conventional, FHA, VA, or another program; fixed or adjustable.
- Term. A 30-year and a 15-year loan are different decisions.
- Rate lock and date. Is the rate locked, and until when? Estimates issued on different days can reflect different market pricing.
If any of these differ, ask for revised estimates before drawing conclusions.
Compare what the lender controls
Compare Section A origination charges, Section B services you cannot shop for, and Section J lender credits together, then review the other loan costs. Discount points typically trade more cash upfront for a lower rate; lender credits often trade a higher rate for less cash at closing. Ask for the actual pricing alternatives rather than assuming one arrangement is always better.
Then check mortgage insurance, both monthly and any upfront amount, the estimated monthly payment, and the cash to close. A lower rate that requires more cash may or may not fit your reserves.
Figures that differ for other reasons
Property taxes, homeowners insurance, the initial escrow deposit, and prepaid interest depend on assumptions such as the closing date and the insurance quote used. One lender estimating lower taxes does not make that loan cheaper; your tax bill will be the same. Ask both lenders to use the same assumptions, or set those lines aside when comparing price.
Use the five-year figures carefully
Page 3 shows what you would pay in total over the first five years and how much of that goes to principal. Subtracting principal from the total gives a rough view of interest, mortgage insurance, and loan costs over that period.
Five years is a convention, not your plan. If you expect to keep the loan for three years or ten, compare at that horizon instead. For an adjustable-rate loan, the five-year numbers rest on rate assumptions, so read the limits on how far the rate and payment can change.
A hypothetical tradeoff
Estimate A has a payment $90 lower each month but needs $3,600 more at closing because it includes discount points. $3,600 ÷ $90 = 40 months before the lower payment covers the extra cost. If you may move or refinance sooner, B may fit better. If you expect to stay longer and the extra cash leaves your reserves intact, A may be worth it. Illustrative figures only, not an actual client or quote.
Getting a second look
For two fixed-rate, fully amortizing loans, use the loan comparison calculator to compare principal and interest plus the cash-paid upfront costs you enter. It does not model adjustable-rate changes or mortgage insurance. Compare those and other excluded costs separately. For the wider purchase picture, see purchase strategy.
Loan Estimates contain personal and financial details. Do not send them by ordinary email or text. Use the secure review request to ask for an approved delivery method first.
Sources and notes
- Consumer Financial Protection Bureau: Compare Loan Estimates
General education only. Product terms, eligibility, pricing, and costs vary by lender and borrower and must be confirmed for a specific transaction. Examples are hypothetical.