APR Calculator
APR Calculator
Loan Details
Fees & Costs
True Cost of Borrowing
Based on your results — what to do next:
Model your full mortgage payment
At a true APR of 6.715%, your $1,580.17/mo goes toward P&I — see the full PITI breakdown with taxes and insurance.
See the full amortization schedule
View how your $250,000 balance decreases month-by-month, and how much goes to interest vs. principal each year.
Compare APR on an auto loan
Auto loans carry different fees — see how the true APR on a car loan compares to your mortgage APR of 6.715%.
APR (Annual Percentage Rate) is the true cost of borrowing expressed as a yearly rate — it includes both the interest rate and upfront fees like origination points and closing costs. This calculator converts your loan's nominal interest rate and fees into a single comparable APR, using the same TILA-compliant method lenders must disclose on your Loan Estimate.
How APR Is Calculated
APR is found by solving for the discount rate (r) that makes the present value of all monthly payments equal the amount financed — which is the loan amount minus upfront fees. This is more complex than the interest rate formula because fees effectively reduce the money you receive while your payment stays the same.
| Variable | Definition |
|---|---|
| APR/12 | Monthly APR (what we solve for using Newton's method) |
| M | Monthly payment (calculated at the nominal rate on the full loan amount) |
| n | Total number of payments (term in months) |
| Amount Financed | Loan amount minus all upfront fees (what you actually receive) |
Example: $250,000 at 6.5%, $3,500 in fees. Amount financed = $246,500. Monthly payment = $1,580. Solving for the rate where PV($1,580 × 360 payments) = $246,500 gives APR ≈ 6.571% — just 0.071% higher than the nominal rate in this low-fee example.
⚠️ Expert Pro-Tip
APR is most useful when comparing loans you'll hold to maturity — it's misleading for short-hold scenarios. If you plan to sell or refinance in 5 years, a 6.75% rate with $0 in fees wins over a 6.5% rate with $8,000 in fees — even though the APR is lower on the second loan. For short holds, divide total fees by monthly savings to find your "break-even months" — that's the real comparison. Use the APR comparison when holding to full term (30 years); use break-even analysis when you're unsure how long you'll keep the loan.
Frequently Asked Questions
What is the difference between APR and interest rate?⌄
Interest rate = cost of borrowing the principal only. APR = interest rate + upfront fees expressed as a single annual rate. APR is always ≥ interest rate. Use APR to compare loan offers fairly across lenders.
Should I choose a loan with a lower rate or lower APR?⌄
If keeping the loan to maturity, choose the lowest APR. If selling or refinancing within 5–7 years, compare total upfront fees instead — lower fees often save more than a slightly better rate on a short hold.
What fees are included in APR?⌄
Included: origination fees, discount points, broker fees, prepaid interest. NOT included: title insurance, appraisal, credit report fees, attorney fees, escrow/prepaid taxes & insurance.
What is a good APR for a mortgage in 2026?⌄
In mid-2026, 30-year fixed APRs range from ~6.5%–7.5% for borrowers with 720+ credit scores. An APR within 0.25% of your quoted rate indicates low fees; more than 0.5% above suggests high origination costs.
How do credit card APRs work differently?⌄
Credit card APR is simpler: no origination fees, and interest compounds daily (monthly rate = APR ÷ 365 × days in billing period). If you pay in full each month, you pay 0% effective APR. Carrying a balance at 24% APR means paying about 2% per month on the outstanding balance.