APR is the Annual Percentage Rate of a mortgage. Unlike the interest rate (which only reflects the cost of the money you borrow), APR also includes most of the upfront fees you pay to get the loan: origination fees, discount points, mortgage insurance premiums, and certain closing costs.

Because APR includes those fees, two loans with the exact same interest rate can have very different APRs. A loan with a 6.5% rate and a 1-point origination fee will have a higher APR than a loan with a 6.5% rate and no points. Comparing APRs is the cleanest way to compare two real loan offers side by side.

APR is required to be disclosed on every consumer mortgage by the federal Truth in Lending Act. You'll see it on the Loan Estimate and the Closing Disclosure. If a lender quotes you only an interest rate without an APR, ask for both — that's how you compare apples to apples.

Related terms

Costs & Pricing

Interest Rate

The percentage charged for borrowing the principal. Does not include fees.

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Costs & Pricing

Discount Points

Optional upfront fees you pay to lower your interest rate. One point = 1% of the loan amount.

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Costs & Pricing

Origination Fee

What the lender charges to process and underwrite your loan, typically 0.5–1.5% of the loan amount.

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Process

Loan Estimate

The standardized 3-page disclosure every lender must give you within 3 business days of applying.

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