U.S. Mortgage Index

Interest rate

Definition

The interest rate is the rate charged on the amount borrowed. It is the price of the credit itself. It is not the annual percentage rate, which is a wider cost-of-credit measure.

In plain English

“What’s the rate?” usually means the interest rate on the loan—the percentage applied to the unpaid balance. That number does not, by itself, capture every charge a borrower may pay to obtain the loan. Certain other charges can make the annual percentage rate different from—and often higher than—the interest rate. Those two figures have separate pages so a disclosure is not misread. Some loans keep one rate for the term. Others can adjust. This page names that difference only at a high level. It does not quote market rates or recommend a structure.

Technical definition

In some GSE files the rate on the note is called the note rate. That is technical vocabulary. The public term on this page remains interest rate.

Why it matters

Payment discussions and the Loan Estimate’s loan-terms block start from the interest rate. Confusing it with APR hides fee differences between otherwise similar loans.

Example

Two hypothetical loans both show a 6% interest rate. One also includes discount points paid at closing. The interest rates match; the annual percentage rates need not.

Commonly confused with

Sources reviewed

Important note

NONE REQUIRED

Last reviewed

September 4, 2026