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.
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 2 (Comparison)
Compare actual dollars paid over different time horizons — with and without the lender fees included in APR.
| Hold Period | With Fees (APR) | Rate Only (no fees) | Extra Cost of Fees | Effective 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% |
How to Use This Mortgage APR Calculator
Enter your loan details and all lender fees to calculate your true Annual Percentage Rate (APR):
- Loan Amount: The amount you're borrowing (home price minus down payment).
- Interest Rate: The stated rate on your loan offer — what determines your monthly P&I payment.
- Origination Fee: The lender's fee for processing your loan, typically $1,000–$3,000 or 0.5–1% of the loan.
- Discount Points: Upfront fee (1 point = 1% of loan) paid to buy down your interest rate.
- Other Lender Fees: Processing, underwriting, and administrative charges from the lender.
- Monthly PMI: If your down payment is under 20%, include your monthly mortgage insurance premium.
The calculator uses Newton's method to precisely solve for the APR — the same algorithm lenders and regulators use.
The APR Formula Explained
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 A | Lender B | |
| Loan Amount | $400,000 | $400,000 |
| Interest Rate | 6.50% | 6.75% |
| Lender Fees | $8,000 | $1,500 |
| Monthly Payment | $2,528 | $2,595 |
| APR | 6.72% | 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.
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.