A no-cost loan trades a higher rate for no upfront fees. See which is cheaper for how long you'll stay.
This calculator compares a no-closing-cost mortgage at a higher rate against a lower-rate loan that charges upfront costs, and finds how many months it takes for the cheaper rate to repay those costs.
A no-cost mortgage rolls the lender and third-party fees into a higher interest rate, so you pay nothing upfront but more every month. A traditional loan charges closing costs at the start in exchange for a lower rate and a smaller payment. The right choice depends on how long you keep the loan, because the lower rate only pays off if you hold it past the break-even point.
The break-even is the month where the total extra interest on the higher no-cost rate equals the closing costs you would have paid upfront. If you expect to sell or refinance before that month, the no-cost option usually wins; if you plan to stay well beyond it, paying costs for the lower rate saves more. This estimate ignores taxes, the time value of money, and any rate that is actually bought down with points, so treat it as a guide rather than a quote. Not financial advice.
No, the costs are recovered through a higher interest rate, so you pay them gradually in your monthly payment rather than upfront.
When you plan to keep the loan past the break-even point, since the lower rate then saves more than the upfront costs.
Yes, fees differ widely between lenders, so compare a full written estimate before deciding.
See the exact formula and a worked example on our methodology page.