Blended Rate Calculator
Enter the balance and interest rate for each loan or debt you hold. The calculator works out the single blended rate that represents your true combined cost of borrowing, weighted by each balance. Use it to compare keeping multiple loans against refinancing into one, consolidating student debt, or understanding the real cost of layered business financing.
Formula
Worked example
You have a $200,000 mortgage at 3.5% and a $50,000 HELOC at 7.25%. Weighted interest: (200,000 x 3.5) + (50,000 x 7.25) = 700,000 + 362,500 = 1,062,500. Total balance: 250,000. Blended rate: 1,062,500 / 250,000 = 4.25%. Annual interest: 4.25% x 250,000 = $10,625.
What is a blended interest rate?
A blended interest rate is a single percentage that summarises the weighted average cost of two or more loans. Unlike a simple average, which treats every rate equally, the blended rate gives more weight to larger balances. If most of your debt sits in a low-rate mortgage, your blended rate will be closer to that mortgage rate even if you also carry a small high-rate credit card. It is the number you would need to put on a single hypothetical loan covering all your balances in order to produce exactly the same total annual interest cost.
How the blended rate formula works
The calculation has three steps. First, for each loan multiply its outstanding balance by its annual interest rate. Second, add those products together to get the total weighted interest. Third, divide by the sum of all balances. In formula form: Blended Rate = sum(Balance x Rate) / sum(Balance). For example, a $200,000 mortgage at 3.5% and a $50,000 HELOC at 7.25% gives a blended rate of [(200,000 x 3.5) + (50,000 x 7.25)] / 250,000 = 4.25%. The simple average of the two rates would be (3.5 + 7.25) / 2 = 5.375%, which overstates the cost because the small high-rate loan gets the same weight as the large low-rate one.
When to use a blended rate comparison
The most common use case is deciding whether to refinance multiple debts into a single new loan. If a lender quotes you a rate lower than your blended rate, you may save money, but always account for origination fees and closing costs before deciding. The blended rate is also useful when managing a student loan portfolio after graduation: federal and private loans often carry different rates, and knowing the blended rate helps you prioritise extra payments toward the highest-rate balance without losing track of the overall picture. For businesses carrying both a term loan and a revolving line of credit, the blended rate shows the all-in cost of financing operations.
Limitations and what the blended rate does not tell you
The blended rate is a snapshot at current balances. Because each loan amortises on its own schedule, the blended rate changes every month as balances shift. It also ignores fees, points, and prepayment penalties, all of which affect the true cost of keeping or replacing a loan. Variable-rate debts such as HELOCs or adjustable-rate mortgages introduce future uncertainty that a single rate cannot capture. Use the blended rate as a quick comparison tool, not as a final decision-making figure. For a complete refinancing analysis, also compare total interest paid over the remaining term, any closing costs on the new loan, and how a rate change would affect monthly cash flow.
Typical interest rate ranges by debt type (US, 2024-2026)
| Debt Type | Typical Rate Range | Notes |
|---|---|---|
| 30-year fixed mortgage | 6% - 8% | Varies with Fed funds rate and borrower profile |
| Home equity loan / HELOC | 7% - 10% | HELOC rate is variable |
| Federal student loan (undergrad) | 5% - 7% | Fixed; set annually by Congress |
| Private student loan | 4% - 16% | Wide spread; depends on credit and co-signer |
| New car loan (good credit) | 5% - 8% | Shorter term = lower total interest |
| Used car loan | 6% - 12% | Higher risk than new-car collateral |
| Personal loan | 8% - 20% | Unsecured; credit score is key driver |
| Credit card (revolving balance) | 20% - 30% | Highest common rate; pay first |
| Business term loan (SBA) | 6% - 13% | Backed by SBA; prime + spread |
| Hard-money / bridge loan | 10% - 18% | Short-term; often real estate |
Use these ranges to sense-check the rates you enter. Actual rates depend on credit score, lender, and market conditions.
Frequently asked questions
What is the difference between a blended rate and a weighted average rate?
They are the same thing. A blended rate is the weighted average of multiple interest rates, where each rate is weighted by the balance it applies to. The terms are interchangeable in personal finance, mortgage lending, and student loan management.
Is a lower blended rate always better?
A lower blended rate means your total annual interest cost is a smaller percentage of your debt, which is generally favourable. However, a low blended rate driven by a single large low-rate loan can mask expensive high-rate balances sitting alongside it. Always check each individual rate and target extra payments at the highest-rate debt.
Can I use this calculator to decide whether to refinance?
Yes, as a starting point. If a refinancing offer is below your blended rate, it will reduce your annual interest. But you also need to factor in closing costs (typically 2-5% of the loan amount), the new loan term, and whether your monthly payment changes. A lower rate over a longer term can actually cost more in total interest than keeping the existing loans.
Why is my blended rate lower than the simple average of my rates?
The blended rate is pulled toward the rates on your largest balances. If your biggest loan has a low rate and your smallest loans carry high rates, the blended rate will be well below the simple average. The simple average treats every rate equally, so it overstates your cost when your largest balances happen to have the lowest rates.
How does the blended rate change as I pay down debt?
Every time you reduce a balance, you change the weights in the formula. If you pay down a high-rate loan faster than the others, the high rate gets less weight and your blended rate falls. If you pay down a low-rate loan preferentially, the high-rate balances grow in relative size and the blended rate rises. The chart in this calculator shows how your blended rate shifts as you pay down the highest-rate loan.
Does the blended rate include fees or APR?
No. This calculator uses the nominal annual interest rate, not the APR. APR includes origination fees, points and other charges spread over the loan term. If you want an apples-to-apples comparison with a new loan offer, compare blended APRs rather than blended interest rates.
What is the blended rate used for in mortgages?
In mortgage lending, the blended rate is often used when a borrower has a first mortgage and a home equity loan or HELOC. Lenders and financial advisors use it to describe the combined cost of both liens on the property, and to compare that cost against a single cash-out refinance. Some lenders also quote a blended rate when combining a fixed first mortgage with a second piggyback mortgage used to avoid private mortgage insurance.