How the Comparison Table Adds Up the Cost of a Conventional Loan

The Quick Read: The comparison table on page 3 of the Loan Estimate adds up cost in two different ways, and neither one is your monthly payment. The “In 5 Years” figures show what you would pay and what you would pay down during the first five years. APR and TIP show cost across the full loan term, expressed as percentages. The first view suits a buyer who may move or refinance. The second suits a buyer planning to keep the loan for decades. Each has blind spots, so the two work best together.

That is the honest answer. A buyer who expects to stay in the house for the long haul should lean on APR and TIP, with a close look at upfront costs. A buyer who might move in a few years should lean on the five-year dollar figures. Most buyers sit somewhere in between, which is why reading both views side by side matters more than picking a favorite.

Lendmire is a mortgage broker arranging conventional loans through wholesale lenders, and the way these numbers get misread comes up often. This guide walks through what each figure measures, how to add them up across offers, and where each one misleads. If you want to see how the underlying programs work, Lendmire’s conventional loan programs page covers the loan side.

Side-by-Side

The two cost views answer different questions. This table lays out what each one covers, using the labels on the form itself.

The CFPB’s blank Loan Estimate form defines these measures. Under “In 5 Years,” the first figure is the total you will have paid in principal, interest, mortgage insurance and loan costs. The second is the principal you will have paid off. APR expresses your costs over the loan term as a rate, and the form states plainly that it is not your interest rate. TIP is the total interest you will pay over the term as a percentage of the loan amount.

Two details are easy to miss. The table is a required part of the form, headed “Comparisons,” with the instruction to use these measures to compare this loan with other loans. That requirement appears in 12 CFR 1026.37. And the table sits on the last of the form’s three pages, after the monthly payment and closing cost details that most buyers read first.

How the Five-Year Numbers Add Up the Cost

The five-year view is the closest thing the form has to an all-in cost for the early years. Subtract the second figure (principal paid off) from the first (total paid). What remains is the borrowing cost for those five years: interest, mortgage insurance and loan costs combined.

One caution. That subtraction is simple arithmetic on the form’s own numbers. It is not an official CFPB formula, so treat it as a reading method, not a disclosed result.

Run it across offers and the picture changes. Picture two Loan Estimates for the same purchase, same loan amount, same term. Subtract on each and you may find Offer B’s borrowing cost is actually lower, because a larger share of its payments went to principal you keep. Looking only at the first figure would have pointed the wrong way.

The mechanics behind these figures are in the CFPB’s commentary on the rule. Principal paid in five years counts payments through the end of the 60th month after the first payment is due. For a loan with a scheduled term under 60 months, the form discloses amounts through the end of the term.

Where mortgage insurance shows up

The five-year total includes mortgage insurance. On a conventional purchase, insurance generally applies when the down payment is under 20%. Across the wholesale programs Lendmire places files with, that covers most buyers using 3% or 5% down, since the program envelope runs to 97% leverage for a first-time buyer on a one-unit principal residence with a fixed rate, and 95% otherwise. Subject to lender guidelines, premiums on published schedules run between 0.58% and 1.86% of the balance annually. That is a range, not a quote, and your own file determines where you land.

Here is the catch. Conventional mortgage insurance does not last forever. Under the Homeowners Protection Act, you can request cancellation at 80% of the original value with good payment history, no subordinate liens and no decline in value. The servicer must terminate it automatically at 78%. The CFPB’s guidance on removing PMI confirms the 80% right and notes that the agencies’ own rules cannot be less favorable to the borrower.

The page 3 totals do not model early removal. A full-term measure may therefore overstate your lifetime insurance cost on a loan that will cancel. The five-year view is cleaner here, since it captures the stretch when insurance is most likely still in place.

What APR and TIP Add Up (and What They Leave Out)

APR is a broader measure than the interest rate. The CFPB explains that it reflects the interest rate plus points, mortgage broker fees and other charges paid to get the loan. A buyer comparing two offers with similar interest costs but different upfront charges will see that difference show up in APR.

TIP works differently. According to the CFPB’s explanation of Total Interest Percentage, TIP does not include upfront fees other than prepaid interest. One loan can have a lower TIP and still cost more at the closing table. TIP is most useful for comparing different Loan Estimates against each other.

TIP can also look alarming. It usually runs much larger than the interest rate or APR, because it covers the whole term while those two are annual rates. A TIP above 100% does not signal a problem. It is how the measure is built. When TIP is calculated, the creditor assumes every payment is made in full and on time, with no extra payments.

The CFPB’s Your Home Loan Toolkit warns that a loan with a low APR or TIP can still carry high initial costs. So neither percentage replaces the closing cost section on page 2.

When the Five-Year View Is the Better Fit

The five-year dollar view is the better lens for a buyer who expects the loan to be short-lived. It fits if any of these describe you:

• You expect to sell, relocate or refinance within several years.
• You are weighing a higher upfront cost against a smaller ongoing cost and want to see the early-years result.
• You are buying with under 20% down and want mortgage insurance counted while it is likely still in place.
• You want dollar figures, not percentages, because they are easier to compare against your cash on hand.

The five-year view better matches a household that will not hold the loan to maturity. Consider it a reading tip, not a rule. Nobody can promise how long you will keep a loan.

Its limits are real. It stops at month 60, so it says nothing about what happens after. It also bundles costs together, which can hide which charge drove the difference. And it reflects scheduled amounts under the disclosed terms, not a forecast of your actual path.

When APR and TIP Are the Better Fit

APR and TIP are the better lens for a buyer planning to hold the loan for most of its term. They fit if this sounds like you:

• You see the home as a long-term residence with no near-term plans to move.
• You want a single percentage to rank offers by overall borrowing cost.
• You are comparing offers that differ mainly in how much interest accumulates across the term.

Their limits matter just as much. APR spreads upfront costs over the full term, so if you sell early, it can understate the true cost of the loan, since those costs are concentrated over fewer years. TIP skips upfront fees, so it can flatter a loan with heavy closing charges. For an adjustable-rate loan, TIP is calculated using current interest rates, so the amount actually paid could be more or less.

A lower APR with a higher five-year total can be the right pick for someone who stays put, and the wrong pick for someone who moves in year four. The form cannot tell you which household you are.

Putting It Together: A Reading Order That Works

Because the form is standardized, offers line up section by section. Here is a practical order for adding them up.

1. Start with page 1. Confirm the loan amount, term and loan type match across offers. Use the “Projected Payments” section for your monthly picture, since page 3 does not state a monthly payment. Escrow for taxes and insurance is not part of the comparison table.

2. Move to page 2. Compare closing costs and cash to close. This is where upfront charges show up, which APR and TIP only partly reflect.

3. Read the credits. The toolkit notes that lender credits can reduce upfront costs and could also affect the interest rate. Check that two offers are being compared on the same footing.

4. Finish on page 3. Subtract principal paid from total paid in the five-year view. Then check APR and TIP.

5. Ask which row decides it. If one offer wins on every measure, the choice is easy. If the offers split, your expected time in the home breaks the tie.

Here is a practical observation from placing conventional files. Buyers often go to the lowest single number on page 3 and stop. The better habit is to check whether the lowest figure comes with the highest upfront cost, then decide which view fits the time horizon. Lendmire’s piece Can You Compare Conventional Loan Offers by the Comparison Table? goes deeper on that side-by-side process.

Key Terms Defined

In 5 Years: The two dollar figures on page 3 showing what you would pay and what you would pay down over the first 60 payments.

APR: Your borrowing costs over the loan term expressed as a rate, which is not your interest rate.

TIP (Total Interest Percentage): The total interest you would pay over the full term as a percentage of the loan amount.

Mortgage insurance: A charge added to the payment on most conventional loans with less than 20% down, which can be cancelled as the balance falls.

Principal paid: The part of your payments that reduces what you owe instead of covering interest or costs.

Common Mistakes When Adding Up Cost

• Treating APR as the interest rate. The form itself says it is not.
• Assuming the lowest TIP is a more affordable loan. TIP leaves out upfront fees.
• Comparing quotes with different loan types or terms. The totals stop meaning the same thing.
• Ignoring escrow differences. A lower taxes-and-insurance estimate on one offer is not a lender saving.
• Reading five-year numbers as a forecast. They are scheduled amounts under the disclosed terms.
• Forgetting that mortgage insurance can cancel. The totals do not model early removal.

If you are weighing whether to take on or skip an escrow account, Lendmire’s article Can You Waive Escrow on a Conventional Loan and What Will It Cost? explains the tradeoff.

A Balanced Verdict

Neither cost view is the right one in every case. The five-year dollar totals are the stronger guide when you may move or refinance, because they reflect the stretch of the loan you are most likely to live through. APR and TIP are stronger when you plan to stay, because they capture the full term. Both can mislead when read alone, since APR can blur which cost drove the result and TIP leaves out upfront fees.

The flip point is your honest timeline. If you cannot say with confidence how long you will keep the loan, give the five-year view slightly more weight and check APR as a cross-check on upfront cost. Whatever the numbers show, they reflect disclosed terms and not a promise about how the loan will play out.

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Program details are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB blank Loan Estimate form

2. 12 CFR 1026.37 (eCFR)

3. CFPB Reg Z 1026.37 commentary

4. CFPB’s guidance on removing PMI

5. CFPB: Interest rate versus APR

6. CFPB: Total Interest Percentage

7. CFPB: Your Home Loan Toolkit