Note Rate
Direct definition
The interest rate stated on the mortgage note, used to calculate monthly interest.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Note rate ≠ APR. Note rate applies only to principal; APR reflects certain financed loan fees on top.
Why it matters
Your monthly interest is calculated on the note rate, not the APR.
Where you may see it
- Mortgage note
- Closing Disclosure
- Rate lock confirmation
A real-world example
A note rate of 6.5% on $400,000 produces about $2,167 of interest in month one.
Educational and illustrative only
A common misunderstanding
The note rate isn't the same as the APR — the note rate excludes fees and other finance charges that APR factors in.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026