APR Calculator
Calculate the true Annual Percentage Rate (APR) of a loan, including origination fees, discount points and other charges that add to the cost of borrowing.
How to use the APR Calculator
- Enter your inputs into the APR Calculator above.
- Results update instantly as you type — no submit button needed.
- Adjust any value to see how the result changes in real time.
The APR calculation
APR solves: Net proceeds = M · [(1 − (1 + APR/12)^−n) / (APR/12)]
APR is the rate that, applied to the actual amount you receive (net of fees), produces the same monthly payment as the nominal rate applied to the face amount. Iteratively solved.
Worked example
A $200,000 mortgage at 6.5% with 1 discount point ($2,000) and $3,000 in other fees: nominal rate 6.5%, but the effective APR including fees is roughly 6.71%. The 0.21% gap is significant over 30 years.
Frequently asked questions
Why is APR different from the interest rate?
APR includes upfront fees that interest rate doesn't. Lenders are required to disclose APR so borrowers can compare apples-to-apples between offers with different fee structures.
Does APR include all costs?
Not always. Some fees (homeowners insurance, title insurance in many states, recording fees) are excluded from APR by regulation. Always ask for a full closing cost breakdown.
Are points always worth paying?
Each discount point typically costs 1% of the loan and lowers the rate by about 0.25%. Worth it if you'll keep the loan long enough to recoup the upfront cost — usually 5+ years.