APR calculator
Mortgage APR Calculator - Compare Rate, Points and Fees
Your results
$1,267
$242,500
4.76%
This calculator estimates the annual percentage rate (APR) for a regular fixed-rate mortgage. APR is not the same as the note rate: it expresses the scheduled payment and certain prepaid finance charges as one annual rate, which makes similarly structured offers easier to compare.
How the estimate is calculated
First, the calculator determines the scheduled principal-and-interest payment using the loan amount, note rate and term. It subtracts discount points and the finance charges you enter from the loan amount to estimate the amount financed. It then solves for the monthly rate whose discounted payment stream equals that amount financed and multiplies the monthly rate by 12.
This is a cash-flow calculation, so the loan term matters. Adding the same fee to a 15-year and a 30-year loan does not produce the same APR.
What to enter as finance charges
Use the lender's Loan Estimate when possible. Discount points and some origination or required lender charges may be included in APR; property taxes, homeowners insurance, escrow deposits and many third-party charges generally are not. Fee treatment depends on the transaction, so our result is an estimate—not a replacement for the APR disclosed by the lender.
Using APR to compare offers
Compare APR only when the loan amount, term, rate type and other material features are alike. APR assumes the scheduled cash flows continue for the stated term; if you sell or refinance early, a lower-fee offer with a slightly higher APR may cost less during the time you actually keep the loan.
See our calculation methodology and test examples and the Consumer Financial Protection Bureau's APR explanation.
Frequently asked questions
What is APR and how is it different from the interest rate?
The interest rate determines interest on the principal, while the annual percentage rate (APR) is a broader annualized measure that also reflects certain points and fees. APR is usually higher than the note rate when the borrower pays prepaid finance charges.
What fees does the APR calculation include?
APR typically includes discount points, origination charges, and other prepaid finance fees required to get the loan. It generally excludes things like appraisal fees, title insurance, and homeowners insurance.
Why is my APR higher than the quoted interest rate?
Because APR spreads upfront points and fees across the life of the loan, those added costs raise the effective rate above the simple note rate. The larger your fees, the wider the gap.
Is a lower APR always the better deal?
Not always. APR assumes you keep the loan for its full term, so if you plan to sell or refinance early, a loan with lower fees but a slightly higher rate may cost less in practice.
Can I use APR to compare loans from different lenders?
APR is useful when the loan amount, term, rate type and other material features are comparable. Do not rely on APR alone: also compare projected payments, cash to close, rate-lock terms and the cost over the period you expect to keep the loan.
