APR Mortgage Calculator
Your note rate ignores fees; the APR folds them in. Enter your points and closing fees to see the true annual cost of your mortgage.
How the apr mortgage calculator works
This calculator translates a quoted note rate into the annual percentage rate, the figure that reflects what the loan truly costs once points and fees are counted. The note rate alone ignores the discount points, origination charges, and other financed costs you pay to get the money.
APR folds those costs into a single yearly rate by asking: what interest rate would make the amount you actually receive equal to the stream of payments you'll make? Because that rate has to be solved for rather than read off, the tool iterates until it converges. Comparing APRs is the cleanest way to weigh two offers with different fee structures.
Worked example: with loan amount of $300,000, note interest rate of 6.75% and loan term (years) of 30, the apr mortgage calculator shows effective apr of 6.932%.
- Note rate
- 6.75%
- APR
- 6.932%
- Points cost
- $3,000
- Total fees
- $5,500
The formula
APR is the rate r that solves Net amount financed = Σ payment ÷ (1 + r)^t for periods t = 1 to n, where the net amount equals the loan minus prepaid finance charges (points and fees). There is no closed form, so r is found by iteration and annualized.
- Assumes you hold the loan to its full term; pay it off or refinance early and your effective cost differs from the stated APR.
- Only finance charges defined as such — points, origination, certain fees — belong in APR; third-party costs like title or appraisal may be excluded, and lenders vary in what they include.
- Based on a fixed rate and a level payment schedule; APR on adjustable loans relies on assumed future rates and is inherently an estimate.
- The result is sensitive to which fees you enter — compare two Loan Estimates fee-for-fee, not just headline APR to headline APR.
- APR spreads upfront costs evenly across the term, which can understate the real cost for borrowers who move or refinance within a few years.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender or a licensed advisor.
Questions about the apr mortgage calculator
If APR includes the fees, why is the note rate ever the more useful number?
The note rate determines your actual monthly payment and how interest accrues on the balance — APR does not. APR is a comparison yardstick that assumes you keep the loan for the full term.
If you expect to sell or refinance in a few years, the note rate plus the actual upfront fees often tells you more than a term-length APR.
Why is the APR higher than the interest rate I was quoted?
Because APR adds the cost of points and lender fees on top of the interest you pay.
Those upfront charges are spread across the loan term and expressed as part of the yearly rate, so APR sits above the note rate whenever fees exist. A large gap between the two usually signals high closing costs worth questioning.
Can two loans have the same APR but cost me different amounts?
Yes, easily. APR assumes you hold the loan for its entire term. One offer might front-load costs with points and a lower rate, the other charge fewer fees at a higher rate, landing on the same APR.
If you sell or refinance early, the low-fee option usually costs less despite the matching APR.
Is the APR Mortgage Calculator free to use?
Yes. Every calculator on MortgageLoansCalculator is completely free, with no sign-up, login or paywall. Run as many scenarios as you like.
What is the difference between APR and interest rate?
The interest rate is the raw cost of borrowing the principal; APR adds points and certain lender fees and expresses the total as one yearly percentage. APR is usually higher and is the fairer figure for comparing two loans with different fees.
Is a lower APR always better?
Usually, but not if you will move soon. APR spreads upfront costs over the full term, so a loan with points can show a low APR yet cost more if you sell or refinance early. Compare the upfront cash as well as the APR.
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