Use this free APR calculator to find the true annual cost of a mortgage including fees and points, and compare it to the interest rate. Enter your lender fees below to see how they affect the effective APR.
Loan Details
Financed Fees (Lender / Loan-Related Only)
Origination, underwriting, processing
1 pt = 1% of loan amount
Broker fee, admin fee, etc.
Interest Rate
6.500%
Note rate
APR vs Rate
Very low fees
APR
6.547%
Effective annual cost
Monthly Payment
$2,212
Based on note rate
Total Fees
$1,700
Included in APR calc
APR Difference
+0.047%
APR minus note rate
Loan Term
30 Years
Used for APR calc
Fee Breakdown
How this is calculated: The APR is found using the Regulation Z / Truth-in-Lending method. Your monthly payment is computed from the note rate and full loan amount. The APR is the annual rate that makes the present value of those payments equal to the loan amount minus lender fees. Include only fees charged by the lender; exclude appraisal, title, taxes, and insurance per Reg Z.
The interest rate on a mortgage is a simple number: the annual cost of borrowing the loan balance, expressed as a percentage. It determines your monthly payment and nothing else. APR goes further by folding in the fees you pay to get that loan and expressing the combined cost as a single annual rate.
The math works by recognizing that fees reduce the money you actually receive. If you borrow $350,000 but pay $4,000 in lender fees at closing, you leave the table with the purchasing power of $346,000 while making payments on $350,000. The APR is the rate that would produce those exact same payments if you had borrowed only $346,000 at a higher rate. That rate is always higher than your note rate when fees are involved.
When APR is most useful: when comparing two different loan offers where one has higher fees and one has a higher rate. The APR normalizes both into a single number you can compare directly. One important caveat: APR assumes you hold the loan to maturity. If you sell the home or refinance within a few years, high upfront fees hurt more than the APR implies because you spread them over fewer payments.
A practical rule of thumb: every point (1% of the loan) you pay in fees raises the APR on a 30-year mortgage by roughly 0.12 to 0.20 percentage points, depending on the rate environment. The shorter the loan or the lower the rate, the bigger the impact each dollar of fees has on APR.