What is the difference between mortgage interest rate and APR?
The short answer
The interest rate sets your monthly principal and interest. The APR adds the upfront finance charges, such as points, lender fees and prepaid interest, and spreads them over the loan term, so it is always equal to or higher than the rate. Example: a $400,000, 30-year loan at 6.250% with $6,000 in points and fees has an APR of about 6.394%. Compare offers on both numbers, with the same loan amount and lock period.
Loan costs
The interest rate measures borrowing interest; APR includes the interest rate and certain additional financing charges, expressed as an annual percentage.
Official source: CFPB — Interest rate and APR ↗
Published · Updated · Sources checkedPublished by Mortgage Lending Group LLC. Editorial standards
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Use both figures for different questions
The note rate helps determine interest charged on the balance. APR helps show the effect of certain borrowing costs. It is not the same as the total housing payment and does not replace reviewing individual fees. CFPB — Interest rate and APR ↗
Keep comparison assumptions aligned
Ask for written estimates with the same loan amount, loan type, term, and lock assumptions. Compare points and credits alongside the rate and APR. When products have different features, ask the lender to explain how those differences affect the comparison.
Bring the decision back to your timeline
An upfront charge may be worthwhile for one holding period and unsuitable for another. Review cash to close, monthly payment, and expected balance together.
Put it into perspective
An example, not an offer
Illustration only: two $400,000 loans may have different upfront charges even when their stated interest rates match. A $4,000 fee difference is cash you should compare explicitly; this example does not calculate either loan’s APR.
Review a Loan Estimate →Related questions
Check the original guidance
Requirements and availability can change. Confirm the program and lender terms for your application.
Educational information, not individualized advice, a quote, commitment, or approval. Examples are hypothetical. Naming a mortgage professional as a contact does not imply personal review of this article.
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