Rates, points and costs
How do I compare Loan Estimates?
Written for Shawn Way MortgageUpdated Sources checked
The short answer
Get Loan Estimates for the same loan amount and type, ideally on the same day. On page 1, compare the rate, monthly payment and risky features. On page 2, compare Section A origination charges, points, Section B, and lender credits in Section J, since those vary by lender. On page 3, check the APR, Total Interest Percentage and five-year cost. Taxes and insurance are not lender costs.
At a glance
| Where on the form | What to compare | Why it matters |
|---|---|---|
| Page 1, Loan Terms | Loan amount, rate, prepayment penalty, balloon payment, rate lock | Confirms you are comparing the same loan |
| Page 1, Projected Payments | Principal and interest, mortgage insurance, estimated total payment | Shows your monthly cost |
| Page 2, Section A | Origination charges and points | Fees set by the lender; the total is what matters |
| Page 2, Section B | Services you cannot shop for | Lender chooses the provider; compare totals |
| Page 2, Section J | Lender credits | Lower upfront cost, often for a higher rate |
| Page 2, Cash to Close | Estimated cash to close | What you bring on closing day |
| Page 3, Comparisons | In 5 Years, APR, Total Interest Percentage (TIP) | Longer-term cost of the loan |
What is a Loan Estimate and when do you get it?
A Loan Estimate is a standard three-page form that every lender uses for most mortgages. Because the form is the same, you can line offers up side by side.
A lender must deliver or mail it no later than the third business day after it receives your application (CFPB TRID compliance guide). An application exists once you give six pieces of information: your name, income, Social Security number, the property address, an estimate of its value, and the loan amount you want. You do not need a signed purchase contract to get one. Before you get a Loan Estimate and say you intend to proceed, the lender can charge only a small fee for your credit report.
A Loan Estimate is not an approval or a denial. Your rate may not be locked yet.
How do you set up a fair comparison?
- Same loan: same loan amount, term, loan type and down payment. If a lender quotes something different, the CFPB suggests asking for a Loan Estimate that matches what you asked for.
- Same day: rates can change daily, so a rate gap between two lenders could be a market move.
- Same approach to points: compare no-point offers with no-point offers, or ask each lender for the same options.
- At least three lenders: the CFPB's Your Home Loan Toolkit recommends getting Loan Estimates from at least three.
What should you compare on page 1?
Check that the loan amount plus your down payment equals the price. Then compare:
- Interest rate and whether it can increase after closing.
- Prepayment penalty and balloon payment. A yes on either is a risk to understand.
- Rate lock status and expiration. Some lenders lock with the Loan Estimate and some do not.
- Projected payments, including mortgage insurance and the estimated total monthly payment. For an adjustable-rate loan, look at the worst case if rates rise.
Which costs on page 2 matter most?
The CFPB says to focus on the fees that vary by lender:
- Section A, Origination Charges: application, underwriting, processing and similar lender fees, plus any points. The CFPB Loan Estimate explainer says it is the total that matters, not the name of each fee.
- Points: one point equals 1% of the loan amount and lowers your rate in exchange for more cash at closing. Points appear in Section A (CFPB).
- Section B, Services You Cannot Shop For: the lender picks the provider, such as the appraiser, so compare the total.
- Section J, Lender Credits: a negative number that offsets closing costs, usually in exchange for a higher rate.
Section C lists services you can shop for, such as title and settlement services. Use consistent tax, insurance and escrow assumptions. Section F also contains prepaid interest, which depends on the loan rate and closing timing; ask why any of these amounts differ. The CFPB warns that lower taxes and insurance on one estimate do not make it a better deal. If they differ a lot, ask why.
What do APR, TIP and "In 5 Years" tell you?
Page 3 has three comparison figures:
- In 5 Years: the total you will have paid in the first five years, and how much of that went to principal. Subtract principal from the total to see five years of interest and fees.
- Annual Percentage Rate (APR): a measure of your costs over the loan term expressed as a rate.
- Total Interest Percentage (TIP): the total interest you would pay over the full term, as a percentage of the loan amount.
The CFPB toolkit cautions that a loan with a low APR or TIP could have high initial costs. APR and TIP assume you keep the loan for the full term. If you expect to sell or refinance sooner, the five-year figure and the upfront costs may matter more.
How do you check cash to close?
Estimated Cash to Close is the amount you are expected to bring to closing. It includes your down payment and closing costs, minus any deposit you already paid, seller credits and other adjustments. Lender credits reduce it. If it is not what you expected, ask the lender to explain the difference.
Also check how you will pay it. The CFPB says payment is usually by cashier's check or wire transfer, and the lender will need proof of where the money came from. Confirm wiring instructions by phone with a number you already know before you send money.
How long do you have to shop, and can you negotiate?
Mortgage-shopping inquiries can remain separately visible on your credit report while being grouped for score calculation. FICO rate-shopping windows vary by score version, commonly 14 to 45 days, so request comparable offers close together.
Other Loan Estimates can help you negotiate. You can ask a preferred lender to match an offer, then confirm that the terms and closing timeline still work.
Example: one point vs. a lender credit on a $300,000 loan
All rates and fees are hypothetical, not current pricing. Both are 30-year fixed loans for $300,000, quoted the same day.
| Line | Lender A | Lender B |
|---|---|---|
| Interest rate | 6.500% | 6.750% |
| Monthly principal and interest | $1,896.20 | $1,945.79 |
| Section A fees (excluding points) | $1,500 | $1,200 |
| Points | 1 point = $300,000 x 1% = $3,000 | $0 |
| Lender credit (Section J) | $0 | -$1,500 |
| Net lender cost upfront | $1,500 + $3,000 = $4,500 | $1,200 - $1,500 = -$300 |
- Upfront difference: $4,500 - (-$300) = $4,800 more with Lender A.
- Monthly difference: $1,945.79 - $1,896.20 = $49.59 less with Lender A.
- Break-even: $4,800 / $49.59 = about 97 months, or just over 8 years.
This is a simple payment cash-flow break-even of about 97 months. It ignores differences in remaining principal as well as time value and taxes. Compare interest, fees and the payoff balance over your likely holding period before deciding which loan costs less overall. Taxes and insurance are left out because they do not depend on the lender. This simple check also ignores the time value of money.
Hypothetical example for illustration. The rates and prices are assumptions, not current pricing or an offer.
Questions people ask
How many Loan Estimates should I get?
The CFPB recommends getting Loan Estimates from at least three lenders. Ask each for the same loan amount, term and loan type.
Does getting a Loan Estimate cost money?
Before you receive a Loan Estimate and say you intend to proceed, a lender can charge only a small credit report fee. Some lenders do not charge it at all.
Is the lowest APR always the cheapest loan?
Not always. APR assumes you keep the loan for the full term, so a loan with a low APR can still have high upfront costs. Check the five-year figure on page 3 too.
Why do taxes and insurance differ between Loan Estimates?
They are estimates of costs the lender does not control. A lower estimate does not make one loan cheaper, so ask the lender why if they differ a lot.
Can a Loan Estimate change?
Yes. If your rate is not locked, or your information or loan changes, you may get a revised Loan Estimate.
Sources
- CFPB: Loan Estimate explainer
- CFPB: Compare Loan Estimates
- CFPB: TILA-RESPA Integrated Disclosure Rule Small Entity Compliance Guide
- CFPB: Your Home Loan Toolkit (last updated July 2026)
- CFPB: How should I use lender credits and points (also called discount points)?
- CFPB: What happens when a mortgage lender checks my credit?
- CFPB (archived blog): Loan Estimate and Closing Disclosure
- CFPB Regulation Z §1026.37(f)(1), comments 1–2; §1026.37(g)(2)
- CFPB Compare and negotiate your loan offers
- FICO: how mortgage rate shopping affects scores
Checked November 1, 2026. Rules, limits and program terms change; confirm current details before you rely on them. Educational information, not a commitment to lend or a determination of eligibility.