Blended Rate Calculator
One loan at 6.5%, another at 9.75% — what rate are you really paying? The blended rate is the balance-weighted average of all your loan rates: the single number any refinance offer has to beat.
| Loan | Balance | Rate | Weight | Interest/yr |
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Educational estimate — not professional financial advice. Fees, points, and compounding differences are not included.
Educational estimate — not professional financial advice. PMI cost on the single-loan alternative is not included; compare separately.
How the blended rate works
A blended rate is the weighted average of your loan rates, with each loan weighted by its outstanding balance — not by counting loans. That is why a plain average of the rates almost always overstates the cost: the cheaper loan is usually the bigger one.
Worked example. A $100,000 mortgage at 5% plus a $40,000 second loan at 6%: ($100,000 × 5 + $40,000 × 6) ÷ $140,000 = 5.2857%. The result always lands between your lowest and highest rate. A refinance offer only saves interest if its rate sits below this number — after you subtract closing costs and fees.
Frequently asked questions
What is a blended rate?
A blended rate is the weighted average interest rate across two or more loans. Each loan's rate is weighted by its outstanding balance, so larger loans pull the result more than smaller ones. The formula is: blended rate = (balance1 × rate1 + balance2 × rate2 + …) / (balance1 + balance2 + …).
How do you calculate a blended rate? (worked example)
List each loan's balance and rate, multiply them, add the products, and divide by the total balance. Example: a $100,000 mortgage at 5% and a $40,000 second loan at 6% gives ($100,000 × 5 + $40,000 × 6) / $140,000 = 5.2857%.
Why not just average the two interest rates?
A simple average overstates your cost whenever the cheaper loan is the larger one — which is the usual case. Example: a $250,000 mortgage at 6.5% plus a $50,000 line at 9.75% blends to 7.0417%, far below the 8.125% simple average.
When is a blended rate used?
Most often in mortgage refinancing (consolidating a first mortgage and a HELOC into one loan), debt consolidation, federal student loan consolidation, and piggyback 80/10/10 mortgages. It is the number a refinance offer has to beat.
Can the blended rate be higher than my highest rate, or lower than my lowest?
No. A weighted average always falls between the lowest and highest rate in the mix. If a calculator shows otherwise, one of the inputs is wrong.
Does the blended rate include fees or points?
Not by itself — it blends nominal interest rates only. The APR of a loan folds most fees into an annualized cost, so when you compare a blended rate against a refinance offer, make sure you are comparing rate to rate, or APR to blended APR.
How does the federal Direct Consolidation Loan rate work?
The U.S. federal Direct Consolidation Loan sets its fixed rate as the weighted average of the loans being consolidated, rounded UP to the nearest one-eighth of one percent (0.125%). Consolidation therefore never lowers your rate. Toggle the federal rounding option above to preview it.
What is a piggyback 80/10/10 mortgage?
An 80/10/10 piggyback splits the purchase into an 80% first mortgage, a 10% second loan (often a HELOC), and a 10% down payment, which avoids private mortgage insurance (PMI). The blended rate tells you the true interest cost of the two loans combined.
Is a piggyback loan cheaper than paying PMI?
It depends on the second lien's rate versus the PMI premium. This calculator shows the blended interest cost of the piggyback; compare that annual cost against a single 90%-LTV loan plus its PMI premium to decide.
Should I refinance if the offered rate is below my blended rate?
On interest cost alone, yes — a rate below your blended rate lowers the interest on the same balance. But subtract closing costs, points, and any prepayment penalties first, and compute the breakeven in months before you commit.
Do different loan terms or compounding change the blended rate?
The textbook blended rate weights by balance only and ignores term differences, compounding frequency, and fees. For loans with very different amortization schedules, compare total interest paid over the same horizon as a cross-check.
Is this calculator financial advice?
No. This tool gives an educational estimate of your blended rate and is not professional financial advice. Talk to a licensed mortgage or financial advisor before refinancing, consolidating, or taking on new debt.
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