Mortgage APR Calculator

What is APR vs. interest rate?

The interest rate is the cost of borrowing the principal, expressed as a percentage. The APR (annual percentage rate) includes the interest rate plus upfront fees like origination charges, points, and some closing costs, giving you the true annual cost of the loan.

Why is my APR higher than my interest rate?

Your APR is higher because it includes the upfront fees you pay to get the loan, amortized over the loan term. The more fees you pay, the larger the gap between your rate and APR.

How is APR calculated?

APR is the rate at which the present value of all monthly payments equals the loan amount minus upfront fees. We solve for this rate using an iterative method (Newton-Raphson) in this calculator.

Should I compare loans by rate or APR?

Compare by APR. Two loans with the same interest rate but different fees will have different APRs. The APR lets you compare the true cost of loans with different rate-and-fee combinations on equal footing.

Does APR include all closing costs?

No. APR includes lender-related fees (origination, points, broker fees) but typically excludes some third-party costs like title insurance, appraisal, and recording fees. Always ask your lender for a full fee breakdown.

Does a mortgage buydown affect APR?

Yes. A temporary buydown lowers your rate for the first few years, which can make APR calculations more complex. Lenders are required to disclose the APR based on the note rate after the buydown period ends.