First Lien (Standard)
First Lien (Jumbo)
Subordinate Lien
Calculated Rate Spread:
HPML Threshold:
function calculateRateSpread() {
var aprInput = document.getElementById('inputAPR');
var aporInput = document.getElementById('inputAPOR');
var loanTypeInput = document.getElementById('inputLoanType');
var resultDisplay = document.getElementById('result-display');
var resSpread = document.getElementById('resSpread');
var resThreshold = document.getElementById('resThreshold');
var statusMessage = document.getElementById('statusMessage');
var apr = parseFloat(aprInput.value);
var apor = parseFloat(aporInput.value);
var loanType = loanTypeInput.value;
// Validation
if (isNaN(apr) || isNaN(apor)) {
alert("Please enter valid numerical percentage values for both APR and APOR.");
return;
}
// Calculate Spread
// The rate spread is the difference between the APR and the APOR
var spread = apr – apor;
// Round to 3 decimal places for precision
spread = Math.round(spread * 1000) / 1000;
// Define Thresholds based on Regulation Z
var threshold = 0;
var categoryName = "";
if (loanType === 'first') {
threshold = 1.5;
categoryName = "First Lien";
} else if (loanType === 'jumbo') {
threshold = 2.5;
categoryName = "First Lien Jumbo";
} else if (loanType === 'subordinate') {
threshold = 3.5;
categoryName = "Subordinate Lien";
}
// Display Results
resultDisplay.style.display = 'block';
resSpread.innerHTML = spread.toFixed(3) + "%";
resThreshold.innerHTML = threshold.toFixed(1) + "%";
// Determine Status
statusMessage.className = 'status-box'; // Reset classes
if (spread >= threshold) {
statusMessage.innerHTML = "STATUS: Higher-Priced Mortgage Loan (HPML)";
statusMessage.classList.add('status-danger');
} else {
statusMessage.innerHTML = "STATUS: Not an HPML (Below Threshold)";
statusMessage.classList.add('status-safe');
}
}
Understanding the Average Prime Offer Rate (APOR)
The Average Prime Offer Rate (APOR) is a survey-based estimate of the Annual Percentage Rates (APRs) currently offered to consumers for mortgage transactions with low-risk pricing characteristics. It is published weekly by the Federal Financial Institutions Examination Council (FFIEC).
Lenders and compliance officers use the APOR as a benchmark to determine if a specific loan transaction is considered a "Higher-Priced Mortgage Loan" (HPML) under Regulation Z (Truth in Lending Act). This calculator helps determine the "Rate Spread" between your transaction's APR and the applicable APOR.
How the Spread is Calculated
The calculation is a straightforward comparison of the transaction's Annual Percentage Rate against the benchmark APOR for a comparable transaction.
Formula:Spread = Transaction APR - APOR
If the resulting difference (spread) exceeds specific thresholds, the loan is categorized as a Higher-Priced Mortgage Loan, which triggers additional regulatory requirements regarding appraisals, escrow accounts, and ability-to-repay standards.
HPML Thresholds by Lien Status
The regulatory thresholds differ based on the priority of the lien and the size of the loan:
First Lien (Conforming): A spread of 1.5 percentage points or more.
First Lien (Jumbo): A spread of 2.5 percentage points or more.
Subordinate Lien: A spread of 3.5 percentage points or more.
Example Calculation
Consider a scenario where a borrower is obtaining a standard First Lien mortgage.
Transaction APR: 7.25%
Published APOR: 5.50%
Calculation: 7.25% – 5.50% = 1.75%
In this example, the spread is 1.75%. Since this is greater than the First Lien threshold of 1.5%, this transaction would be classified as a Higher-Priced Mortgage Loan (HPML).
Using This Calculator
To use this tool accurately, you must first obtain the current APOR from the FFIEC website. The APOR table is updated weekly. Enter the final APR of the loan you are underwriting, the APOR for the week the interest rate was set, and select the correct lien position. The calculator will instantly determine the spread and flag potential compliance issues.