Last reviewed: 3 October 2026
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Interest rate vs. APR, explained
A mortgage has more than one cost number. The CFPB distinguishes the interest rate, which reflects the cost of the money borrowed, from the annual percentage rate (APR), which also reflects certain other charges.
What this term means: the CFPB defines the interest rate as the cost you will pay each year to borrow the money, expressed as a percentage rate, and the annual percentage rate (APR) as a broader measure of the cost of borrowing that reflects the interest rate plus other charges.[1]
What each measure includes
| Interest rate | APR | |
|---|---|---|
| What the CFPB says it is | The cost you pay each year to borrow the money, expressed as a percentage rate.[1] | A broader measure of the cost of borrowing money than the interest rate.[1] |
| Fees and other charges | Does not reflect fees or any other charges you may have to pay for the loan.[1] | Reflects the interest rate, any points, mortgage broker fees and other charges that you pay to get the loan.[1] |
| Relationship | The CFPB lists the interest rate, points, fees and other charges as separate costs of taking out a mortgage.[1] | Usually higher than the interest rate, because it reflects more than the interest rate.[1] |
| Where it appears on a Loan Estimate | Page 1, under “Loan Terms.”[1] | Page 3, under “Comparisons.”[1] |
The CFPB’s cautions about comparing APRs
The CFPB adds several cautions on the same page. Each is a caution the CFPB gives about comparing APRs:
- For adjustable-rate mortgage loans, the APR does not reflect the maximum interest rate of the loan.[1]
- Take care when comparing the APRs of fixed-rate loans with the APRs of adjustable-rate loans, or when comparing the APRs of different adjustable-rate loans.[1]
- Take care when comparing the APR of a closed-end loan, which includes fees, with the APR of a home equity line of credit, which does not.[1]
- The APR should not be the only figure you look at when assessing a loan.[1]
The CFPB also says to take care to understand any differences between the terms being offered when you compare loan options.[1] Our guide to reading your Loan Estimate shows where these figures sit on the form.
How to verify this yourself
Open the CFPB page in the reference list and compare its definitions with the Loan Estimate you were given: find the interest rate on page 1 under “Loan Terms” and the APR on page 3 under “Comparisons.” Ask the lender or broker, in writing, which charges are reflected in the APR on your form. Our guide to Regulation N covers federal rules on mortgage advertising.
What this page does not cover
This page is general information, not legal or financial advice. It does not give or compare any current rate or APR, does not rank any loan or lender by cost, and does not explain how an APR is calculated. We summarize only the CFPB page above; the federal rule that governs how the APR is determined is separate and is not summarized here. The CFPB page was last reviewed 28 August 2026; this page was last reviewed 3 October 2026.