Hoepa Rate Spread Calculator

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HOEPA Rate Spread Calculator

Calculate the difference between APR and APOR for Regulatory Compliance

First Lien (Purchase/Refinance) Subordinate (Junior) Lien
Calculated Rate Spread:

Understanding the HOEPA Rate Spread

The Home Ownership and Equity Protection Act (HOEPA) uses the rate spread to identify high-cost mortgages. The spread is the difference between the Annual Percentage Rate (APR) on a loan and the Average Prime Offer Rate (APOR) for a comparable transaction as of the date the interest rate is set.

How to Interpret Results

  • HPML Threshold: For first liens, if the spread is 1.5 percentage points or more, it is considered a Higher-Priced Mortgage Loan.
  • HOEPA High-Cost Threshold: A first-lien loan is typically "High-Cost" if the spread exceeds 6.5 percentage points.
  • Subordinate Liens: Higher thresholds apply (typically 3.5 for HPML and 8.5 for HOEPA).

Example Calculation

If your mortgage has an APR of 8.5% and the APOR is 6.0%, your rate spread is 2.5 percentage points. For a first lien, this would exceed the 1.5% HPML threshold but remain below the 6.5% HOEPA high-cost threshold.

function calculateHoepaSpread() { var apr = parseFloat(document.getElementById('loanApr').value); var apor = parseFloat(document.getElementById('aporValue').value); var lien = document.getElementById('lienStatus').value; var resultDiv = document.getElementById('hoepaResults'); var spreadOutput = document.getElementById('spreadOutput'); var complianceStatus = document.getElementById('complianceStatus'); if (isNaN(apr) || isNaN(apor)) { alert("Please enter valid numerical values for APR and APOR."); return; } var spread = (apr – apor).toFixed(3); resultDiv.style.display = 'block'; spreadOutput.innerHTML = spread + "%"; var isHighCost = false; var isHpml = false; if (lien === 'first') { if (spread >= 6.5) isHighCost = true; if (spread >= 1.5) isHpml = true; } else { if (spread >= 8.5) isHighCost = true; if (spread >= 3.5) isHpml = true; } if (isHighCost) { complianceStatus.style.backgroundColor = '#fed7d7'; complianceStatus.style.color = '#c53030'; complianceStatus.innerHTML = "HIGH-COST MORTGAGE (HOEPA): This loan exceeds the Section 32 high-cost threshold. Special disclosures and restrictions apply."; } else if (isHpml) { complianceStatus.style.backgroundColor = '#feebc8'; complianceStatus.style.color = '#9c4221'; complianceStatus.innerHTML = "HIGHER-PRICED MORTGAGE (HPML): This loan exceeds the Section 35 HPML threshold. Appraisal and escrow requirements may apply."; } else { complianceStatus.style.backgroundColor = '#f0fff4'; complianceStatus.style.color = '#2f855a'; complianceStatus.innerHTML = "STANDARD LOAN: The rate spread is below the primary regulatory thresholds for HPML and HOEPA."; } }

HOEPA Rate Spread Guide

Determining the rate spread is a critical step for lenders and compliance officers to ensure adherence to Regulation Z. This calculation helps identify whether a loan is subject to the Home Ownership and Equity Protection Act (HOEPA) or classified as a Higher-Priced Mortgage Loan (HPML).

What is the APOR?

The Average Prime Offer Rate (APOR) is a weekly survey-based estimate of APRs currently offered to consumers for mortgage products with low-risk pricing characteristics. The Federal Financial Institutions Examination Council (FFIEC) publishes these rates weekly. To use this calculator accurately, you must retrieve the APOR that corresponds to your loan's lock-in date and term.

HOEPA Thresholds Explained

Under the current CFPB regulations, a loan is considered "High-Cost" under HOEPA if the APR exceeds the APOR by more than:

  • 6.5 percentage points for a first-lien mortgage.
  • 8.5 percentage points for a first-lien mortgage where the dwelling is personal property and the loan amount is less than $50,000.
  • 8.5 percentage points for a subordinate or junior-lien mortgage.

Why the Rate Spread Matters

If a loan is flagged as "High-Cost" under HOEPA, the lender must provide specific disclosures to the borrower at least three business days before closing. Additionally, HOEPA loans are prohibited from including certain features like balloon payments (with exceptions), negative amortization, and most prepayment penalties. Calculating the spread accurately ensures that borrowers are protected and lenders avoid significant legal and regulatory penalties.

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