Blended Rate Calculator

Multiply each balance by its own interest rate, add those two figures together, then divide by the combined total balance. This weights each rate by how much money it actually applies to, so a larger balance at a lower rate pulls the blended result down more than a smaller balance at a higher rate pulls it up. It is the same math used to compare combined debts against a single refinance offer.

Because the blended rate is weighted by balance size, not a simple average of the two percentages. A large balance at a lower rate pulls the blended figure toward itself even if the smaller balance carries a much higher rate. This is normal and expected — the blended rate reflects what you're actually paying overall, not what you'd get by averaging the two rate numbers directly.

It's the single, weighted-average interest rate you're effectively paying when you carry two home loans at once, most often a first mortgage plus a second lien like a HELOC or home equity loan. Because the first mortgage balance is usually far larger than the second, it dominates the blended figure even though the second loan often carries a noticeably higher rate. Lenders and borrowers use it to compare combined home debt against a single new loan.

The same balance-weighted formula applies: multiply the first mortgage's balance by its rate, multiply the second loan's balance by its (typically higher) rate, add the two results, then divide by the combined balance. On an 80-10-10 piggyback, the 80% first mortgage carries eight times the weight of the 10% second loan, so the blended rate usually sits much closer to the first mortgage's rate than to the second loan's.

Not automatically — a lower blended rate on paper doesn't account for a new loan's closing costs, which the Consumer Financial Protection Bureau notes typically run 2% to 6% of the loan amount. Even if a refinance offer beats your current blended rate, you need to divide those closing costs by your monthly savings to find the break-even point in months, then weigh that against how long you plan to keep the loan.

A simple average adds two percentages and divides by two, ignoring how much money each rate actually applies to. A blended rate weights each rate by its balance, so it reflects the real dollar cost of the combined debt rather than treating a $10,000 balance and a $300,000 balance as equally important. For any two unequal balances, the blended rate and the simple average will differ, sometimes substantially.

Yes — a HELOC's rate can change over the draw period since it's typically variable, per CFPB guidance on home equity lines of credit, so a blended rate calculated today only reflects today's HELOC rate. If the HELOC's rate moves, the blended rate moves with it even if the first mortgage's fixed rate never changes. It's worth recalculating the blended rate whenever the HELOC resets, not just once at origination.

Divide your total closing costs by your monthly payment savings. For example, $6,000 in closing costs against $300 in monthly savings breaks even in 20 months; a refinance is generally worth it only if you plan to stay in the loan well past that point. Closing costs typically run 2% to 6% of the loan amount according to the CFPB, so this calculation matters more the higher those costs run.

Origination fees, appraisal fees, title insurance, and any discount points you choose to buy are the main components the CFPB lists among typical refinance closing costs. These are distinct from the interest rate itself, so a refinance offer with a lower rate than your blended rate can still cost more overall in the short term once these upfront fees are counted. Comparing the full Loan Estimate, not just the headline rate, gives the fairest picture.

This calculator handles the two-balance case, which covers the most common real-world scenario: a first mortgage combined with a second lien, or two credit balances at different rates. For three or more loans, apply the same weighted formula by hand — multiply each balance by its rate, sum all the results, then divide by the sum of all the balances — since the underlying math scales to any number of loans.

A conventional mortgage with less than 20% down typically requires private mortgage insurance, an added monthly cost that protects the lender, not the borrower, according to the CFPB. A piggyback structure like an 80-10-10 splits the borrowing into a first mortgage and a second loan sized to avoid that 20% threshold, which avoids PMI entirely. Whether that saves money depends on comparing PMI's cost against the second loan's higher blended-rate impact.

Put each balance in one column and its matching rate in the next, then use SUMPRODUCT to multiply every balance by its own rate and add the results: =SUMPRODUCT(balance_range, rate_range)/SUM(balance_range). This scales cleanly beyond two loans, since SUMPRODUCT handles as many rows as you add, whereas building the same formula by hand gets unwieldy past three or four balances. It's the same weighted-average logic this calculator applies, just in spreadsheet form.

No. A blended rate is a weighted average of two or more note rates on separate loans, while APR expresses the total yearly cost of a single loan, including fees like points and origination charges, as one percentage. You can calculate a blended rate for two mortgages with no fees involved at all, but APR always folds financing costs into the number. Comparing a blended rate against a new loan's APR, rather than its note rate, gives a fairer refinance comparison.