Mortgage APR Calculator

Calculate the true annual percentage rate on any mortgage offer. See how origination fees, discount points, and lender charges affect your real borrowing cost — and compare two loan offers side by side.

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True Annual Percentage Rate (APR)
-508.430%
Stated rate: 6.750% — APR is -515.180% higher
Monthly Payment
$2,270
Total Lender Fees
$4,000
Total Interest
$467,234
Total Loan Cost
$821,234
Origination Fee: $2,500
Other Fees: $1,500

Enter a second loan offer to compare true APRs. A lower rate with high fees can cost more than a higher rate with low fees.

Lender 1 (Your Input)

Lender 1
APR: -508.430%
Rate: 6.750% · Fees: $4,000
Monthly P&I: $2,270
Total cost: $821,234

Lender 2 (Comparison)

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Lender 2
APR: -510.631%
Rate: 6.500% · Fees: $8,700
Monthly P&I: $2,212
Total cost: $805,106
Lender 2 has a lower APR by 2.201%. Always compare APRs — not just stated rates — when choosing a lender.

Compare actual dollars paid over different time horizons — with and without the lender fees included in APR.

Hold PeriodWith Fees (APR)Rate Only (no fees)Extra Cost of FeesEffective APR
5 years$140,206$136,206$4,000-1156.721%
10 years$276,411$272,411$4,000-971.273%
15 years$412,617$408,617$4,000-802.168%
30 years$821,234$817,234$4,000-508.430%
The $4,000 in lender fees is a fixed cost — the longer you hold the loan, the less impact fees have on your effective APR. This is why refinancing frequently destroys value: you restart the fee clock each time.

How to Use This Mortgage APR Calculator

Enter your loan details and all lender fees to calculate your true Annual Percentage Rate (APR):

The calculator uses Newton's method to precisely solve for the APR — the same algorithm lenders and regulators use.

The APR Formula Explained

APR solves for the discount rate where:

Net Loan Proceeds = Sum of all payments / (1 + APR/12)^n

Net Proceeds = Loan Amount − Upfront Fees

Example: $350,000 loan, $4,000 fees, 6.75% rate, 30 years
Net proceeds = $346,000
APR ≈ 6.83% (fees add ~0.08% to effective rate)

The larger the fees relative to the loan amount, and the shorter the loan term, the bigger the gap between your stated rate and APR.

Interest Rate vs APR: Key Differences

Same Loan, Two Lenders

Lender ALender B
Loan Amount$400,000$400,000
Interest Rate6.50%6.75%
Lender Fees$8,000$1,500
Monthly Payment$2,528$2,595
APR6.72%6.79%
30-Year Total Cost$918,880$936,720

Lender A has a lower rate but charges $6,500 more in fees, resulting in only a slightly lower APR. Over 30 years, Lender A is still cheaper — but if you sell in 5 years, Lender B wins because you haven't amortized Lender A's fees.

When APR Is Most and Least Useful

APR is most useful when: Comparing loans of the same type and term from different lenders. The higher the APR spread versus the stated rate, the more the lender is charging in fees.

APR is misleading when: You plan to sell or refinance before the loan term ends. APR assumes you hold the loan to maturity and amortizes fees over the full term. If you sell in year 5, your true effective rate is much higher than the APR suggests — because you paid the full fees but only held the loan briefly.

Rule of thumb: For every 5 years less you hold the loan, the effective cost of fees roughly doubles. A $5,000 fee on a 30-year loan costs about $14/month in effective rate terms — but on a loan you hold for only 3 years, it costs $139/month.

Discount Points: When Do They Pay Off?

Paying discount points lowers your interest rate but increases your APR (because points are a fee). Points make financial sense only if you hold the loan long enough for the monthly savings to recover the upfront cost.

Break-even months = Point cost / Monthly savings from lower rate

Example: 1 point on $400,000 = $4,000
Rate drops from 6.75% to 6.50%
Monthly savings = $2,595 − $2,528 = $67/month
Break-even = $4,000 / $67 = 60 months (5 years)

If you plan to stay longer than 5 years, the point pays off. If you'll likely move or refinance sooner, skip the points.

Frequently Asked Questions

Under the Truth in Lending Act (TILA), APR must include origination fees, discount points, mortgage broker fees, prepaid mortgage interest, and mortgage insurance premiums. Excluded are third-party fees like appraisal, title insurance, credit reports, and escrow — which is why APR understates the total cost of getting a mortgage.
APR includes the upfront cost of obtaining the loan (fees) spread over its life, in addition to the interest. The more you pay in fees, the larger the gap. A loan with zero fees would have an APR equal to its interest rate.
Usually yes — when comparing loans of the same type and term. But APR assumes you keep the loan to maturity. If you expect to move or refinance within 5–7 years, a lower rate with slightly higher fees (and higher APR) could actually cost you less overall. Use the Hold Period Analysis tab to see your effective rate.
The formula is standardized under Regulation Z, but lenders have discretion in which fees they include. Two lenders with identical rates and fees can show slightly different APRs depending on what they classify as "finance charges." Always request the Loan Estimate form, which standardizes fee disclosure.
APR should be close to your interest rate. An APR that is more than 0.25% above your stated rate suggests significant lender fees. On a 30-year fixed loan at 6.75%, an APR below 7.0% is reasonable. Higher spreads are a red flag — shop at least 3 lenders and compare Loan Estimates side by side.

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