Does APR include PMI, property taxes, or homeowners insurance?

No. APR in this calculator includes finance charges like points and certain lender fees, but it does not include escrowed items such as property taxes, homeowners insurance, HOA dues, or mortgage insurance premiums. Those costs still matter for your monthly budget but are handled separately.

Can I use this calculator for adjustable-rate or interest-only loans?

This version assumes a fixed-rate, fully amortizing loan with equal monthly payments for the entire term. ARMs and interest-only mortgages have changing payments and may require a more complex APR model than what is provided here.

Why is the APR higher than my note rate?

When you pay points and lender fees upfront, you are effectively paying more for the right to borrow the same amount of principal. APR converts those upfront finance charges into an equivalent annual rate, which is why it is usually higher than the note rate.

Can APR ever be lower than the note rate?

Yes. If your lender gives you enough credits or rebates to offset fees, the net finance charges can be negative, and the APR may come out slightly lower than the note rate. This often happens when you accept a higher rate in exchange for credits toward closing costs.

How close will this APR be to my lender’s disclosure?

The calculator uses a simplified numerical solve and typical treatment of points and fees. Actual disclosures follow detailed regulatory rules about which charges are included, how compounding is handled, and how timing is treated, so small differences are normal. Always defer to official Loan Estimate and Closing Disclosure documents for binding APR figures.

finance calculator

Mortgage APR Calculator

See the true APR on your mortgage by including points and lender fees, plus the monthly payment and total finance charges.

Results

Monthly payment (P&I): $2,528
Amount financed (after points/fees): $393,500
Total finance charges: $6,500
Total of payments: $910,178
APR (annualized): 6.20%

Overview

Use this mortgage APR calculator to see the true annual percentage rate (APR) on a loan once you factor in discount points and lender fees—not just the advertised note rate. By showing the monthly payment, amount financed, total finance charges, total of payments, and APR, it helps you compare offers from different lenders on an apples-to-apples basis.

How to use this calculator

Enter your desired loan amount, note rate (the quoted interest rate), and term in years.
Enter the discount points as a percentage of the loan amount and any additional lender fees that should be treated as finance charges for APR purposes.
Review the resulting monthly principal-and-interest payment, amount financed after points and fees, total finance charges, total of payments, and the annualized APR.
Adjust points and fees to compare scenarios such as paying points to buy down the rate versus choosing a slightly higher rate with lower upfront costs.

Inputs explained

Loan amount: The principal you are borrowing on the mortgage (for example, the purchase price minus your down payment). The note rate and term are applied to this full amount to determine your monthly payment.
Interest rate (note rate, %): The nominal interest rate stated in your mortgage note. This rate drives your monthly principal-and-interest payment but does not include the effect of upfront points and fees.
Term (years): The length of the mortgage in years, such as 30 or 15. Longer terms lower the monthly payment but increase total interest; shorter terms do the opposite.
Points (% of loan): Discount points paid upfront, expressed as a percentage of the loan amount (for example, 1 point = 1% of the loan). Points are finance charges that increase the effective cost of borrowing and therefore raise APR unless offset by a lower note rate.
Other lender fees: Flat dollar fees charged by the lender that are treated as finance charges for APR—such as origination, underwriting, and certain processing fees. Escrows for taxes/insurance and third-party costs may be handled differently and may not always enter APR.

Outputs explained

Monthly payment (P&I): Your principal-and-interest payment each month based on the full loan amount, note rate, and term. This does not include taxes, insurance, HOA dues, or mortgage insurance.
Amount financed: The net amount used in the APR calculation after subtracting points and included lender fees from the nominal loan amount. It approximates the amount you effectively receive when finance charges are paid upfront.
Total finance charges: The total cost of borrowing over the full term excluding the amount financed. It is computed as total of payments minus amount financed and includes interest plus any finance charges treated as prepaid points/fees.
Total of payments: The sum of all scheduled monthly principal-and-interest payments over the life of the loan. This shows how much you will pay back in total if you hold the mortgage to term.
APR (annualized): The annual percentage rate—the effective annual interest rate that equates the amount financed to the full stream of payments, including finance charges. It is usually higher than the note rate when you pay points and lender fees.

How it works

The note rate is the interest rate written in your mortgage note and is used to calculate your monthly principal-and-interest payment on the full loan amount.

Discount points and lender fees, however, change the effective cost of borrowing. Points are typically charged as a percentage of the loan amount (for example, 1 point = 1% of the loan) and are paid upfront at closing; lender underwriting, origination, and processing fees are often flat dollar amounts.

For APR purposes, we treat points and included lender fees as finance charges paid at closing. The calculator subtracts these charges from the nominal loan amount to compute the amount financed—the net amount you effectively receive for the cash flow calculation.

Your monthly payment is still based on the full loan amount, the note rate, and the term using the standard fixed-rate mortgage formula.

To find APR, we conceptually solve for the interest rate that, when applied to the amount financed and the full schedule of monthly payments over the term, equates the present value of the payment stream to the amount financed. The result is annualized and expressed as APR.

Total finance charges are calculated as the total of payments (monthly payment × number of months) minus the amount financed. This highlights how much you are paying in interest and financed charges over the life of the loan.

Formula

Points (dollars) = Loan amount × Points%\nAmount financed ≈ Loan amount − Points (dollars) − Other lender fees\nMonthly payment (P&I) = Standard amortization using note rate on full loan amount\nAPR = Annualized rate r such that Amount financed = Σ Payment / (1 + r/12)^{month}\nTotal of payments = Payment × Term months\nTotal finance charges ≈ Total of payments − Amount financed

When to use it

Comparing loan estimates from multiple lenders by looking at APR instead of just the note rate to see which offer is truly cheaper after points and fees.
Testing whether buying points to lower the rate actually reduces APR versus taking a higher rate with fewer upfront charges.
Understanding how lender credits (negative points) or fee waivers affect the relationship between the note rate and APR.
Explaining to clients or partners why two loans with the same note rate can have different APRs and total finance charges.
Checking whether a refinance with closing costs actually lowers your effective borrowing cost compared with your existing loan.

Tips & cautions

Use the same loan amount, term, and assumptions across lender quotes so that differences in APR are driven by rate and fee structure rather than by different scenarios.
Set points to 0 if you are not paying discount points and only enter the lender fees that should be treated as finance charges; escrows for taxes and insurance usually do not affect APR.
Remember that APR does not reflect how long you’ll keep the loan. If you expect to sell or refinance in a few years, a slightly higher APR with lower upfront costs might be better than a lower APR that requires expensive points.
Pair this APR view with a breakeven calculator for points to see how long it takes for monthly payment savings to offset upfront charges.
Be sure to compare this calculator’s results with official Loan Estimate and Closing Disclosure forms from your lender, as regulatory APR calculations follow specific rules about which charges count.
Assumes a fixed-rate, fully amortizing mortgage with level monthly payments. Adjustable-rate, interest-only, or balloon loans require different APR modeling.
Does not include PMI, taxes, insurance, HOA dues, or prepayment penalties in the APR calculation; those costs still matter for your overall budget and should be evaluated separately.
Uses a simplified numerical method to approximate APR; minor differences may exist versus lender disclosures that follow detailed regulatory conventions.
Does not model early payoff, prepayments, or refinancing before maturity. If you do not hold the loan to term, your realized cost of borrowing will differ from the stated APR.

Worked examples

$400k loan, 6.5% note, 30 years, 1% points, $2,500 fees

Loan amount = $400,000; Points (1%) = $4,000; Other fees = $2,500; Amount financed ≈ $400,000 − $4,000 − $2,500 = $393,500.
Using the 6.5% note rate over 30 years, the monthly P&I payment is approximately $2,528.
Solving for APR with $393,500 as the amount financed and a $2,528 payment over 360 months produces an APR around 6.66%, higher than the 6.5% note rate because of points and fees.

$300k loan, 6.75% note, 30 years, 0.5% points, $1,500 fees

Loan amount = $300,000; Points (0.5%) = $1,500; Other fees = $1,500; Amount financed ≈ $297,000.
Monthly payment at 6.75% over 30 years is about $1,946.
The APR based on $297,000 amount financed and the $1,946 payment is around 6.85%, again slightly higher than the note rate because of upfront charges.

Comparing a no-points option vs buying points

Scenario A: 6.75% note rate with zero points and minimal fees; Scenario B: 6.25% note rate with 1.5% in points.
Run both through the calculator using the same loan amount and term. Scenario B may have a lower monthly payment but higher upfront costs and potentially only a slightly lower APR.
Use the APR results and your expected time in the home to decide whether the extra upfront cost of points is justified.

Deep dive

This mortgage APR calculator shows the true APR on a home loan by including discount points and lender fees alongside your note rate, payment, and total finance charges.

Enter your loan amount, interest rate, term, points, and lender fees to see monthly principal-and-interest payment, amount financed, total interest and finance charges, total of payments, and the resulting APR so you can compare mortgage offers on an apples-to-apples basis.

Use it to evaluate whether paying points or accepting lender credits makes sense for your time horizon, and to better understand the APR figures shown on official Loan Estimate and Closing Disclosure forms.

FAQs

Does APR include PMI, property taxes, or homeowners insurance?: No. APR in this calculator includes finance charges like points and certain lender fees, but it does not include escrowed items such as property taxes, homeowners insurance, HOA dues, or mortgage insurance premiums. Those costs still matter for your monthly budget but are handled separately.
Can I use this calculator for adjustable-rate or interest-only loans?: This version assumes a fixed-rate, fully amortizing loan with equal monthly payments for the entire term. ARMs and interest-only mortgages have changing payments and may require a more complex APR model than what is provided here.
Why is the APR higher than my note rate?: When you pay points and lender fees upfront, you are effectively paying more for the right to borrow the same amount of principal. APR converts those upfront finance charges into an equivalent annual rate, which is why it is usually higher than the note rate.
Can APR ever be lower than the note rate?: Yes. If your lender gives you enough credits or rebates to offset fees, the net finance charges can be negative, and the APR may come out slightly lower than the note rate. This often happens when you accept a higher rate in exchange for credits toward closing costs.
How close will this APR be to my lender’s disclosure?: The calculator uses a simplified numerical solve and typical treatment of points and fees. Actual disclosures follow detailed regulatory rules about which charges are included, how compounding is handled, and how timing is treated, so small differences are normal. Always defer to official Loan Estimate and Closing Disclosure documents for binding APR figures.

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This mortgage APR calculator is an educational tool and does not replace official lender disclosures. It uses simplified assumptions about which charges are treated as finance charges and how APR is solved. Real-world APR calculations follow detailed regulatory guidance and may produce slightly different results. Always review lender-provided Loan Estimates and Closing Disclosures and consult a qualified mortgage professional before locking a rate or choosing between loan options.