Mortgage basics
APR (annual percentage rate)
Also called: Annual percentage rate
In short
APR expresses a loan's yearly cost including certain fees, not just the interest rate. It's built to compare offers — but only fairly between similar loan types.
The interest rate is the cost of borrowing the principal. The APR, or annual percentage rate, folds the rate together with certain required loan costs — points and some lender fees — into a single yearly figure. Because it captures more than the rate alone, the APR is usually higher than the note rate.
APR exists so borrowers can compare offers on a more even footing than headline rate allows. It works best comparing two loans of the same type and term; across very different structures it can mislead, because the fees each one bundles in differ.
APR is disclosed on your Loan Estimate and Closing Disclosure. It is a comparison tool, not a rate quote or a promise — the rate and fees you're actually offered depend on your full profile and the lender.
Related
Current as of August 2026.