If you’re considering taking out two mortgages instead of one, possibly to avoid mortgage insurance or because you’re assuming a mortgage, my blended rate mortgage calculator might help.
It calculates the interest rate across two loans using the loan amount and mortgage rate. This will give you a better idea of the total cost versus taking out just a single loan instead.
And as noted, if you’re able to avoid costly mortgage insurance in the process, the savings can be even greater.
A lower-LTV first mortgage may also be cheaper because mortgage rate pricing adjustments tend to be lower at lower loan-to-value ratios (LTVs).
So there are a number of benefits of going with two mortgages instead of one depending on your particular wants and needs.
Blended Rate Mortgage Calculator
Taking out two mortgages? Enter each loan amount, interest rate, and term to instantly see your weighted blended rate, combined monthly payment, and total interest across both loans.
Results update automatically as you type — no submit button needed.
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The blended rate is a weighted average of both interest rates using each loan’s share of the total principal. It gives you a single number to compare against alternatives like refinancing into one loan — but keep in mind it does not account for the difference in loan terms.
Frequently Asked Questions
What is a blended rate mortgage?
A blended mortgage rate is the weighted average of the interest rates on two home loans, determined by each loan's share of the total combined loan amount.
For example, if you have a $400,000 first mortgage set at 6.5% and a $100,000 second mortgage set at 8.0%, the blended rate is (80% × 6.5%) + (20% × 8.0%) = 6.8%.
You wind up with a single number to compare your combined borrowing cost against alternatives like taking out one loan, or refinancing into one loan.
How is the total interest calculated on two mortgages?
The total interest paid is simply the sum of each loan's total interest, which is what this calculator shows in the breakdown.
For example, a $400,000 loan set at 6.5% for 30 years has total interest of $510,178. If there’s a $100,000 second mortgage set at 8% for 30 years, that’s another $164,155.
Combined it’s $674,333 in total interest. That would be less than one $500,000 loan set at 7%, which would amount to $697,544 in interest.
Why would someone take out two mortgages instead of one?
One of the most common reasons is to avoid mortgage insurance, which is required if a single loan exceeds 80% LTV.
To accomplish this, you can structure a piggyback loan such as an 80-10-10. This breaks down as an 80% first mortgage, 10% second mortgage, and 10% down payment.
Another common reason is when assuming a seller's existing low-rate mortgage and having an assumption gap between the loan and purchase price.
In this case, you’ll need to come in with a large down payment or take out a second loan to cover the remaining difference.
Knowing the blended rate gives you a better understanding of the effective mortgage rate assuming you need a second mortgage.
But the two loans combined can still feature a significantly lower rate versus a new mortgage at today’s market rates.
Can I assume a seller’s mortgage and use a second mortgage to cover the gap?
Yes, if the existing mortgage is assumable (FHA/VA/USDA), this is a common strategy to bridge that gap.
When you assume a mortgage, you take over the seller's remaining balance at their original interest rate and loan term.
This means a large down payment or second mortgage will likely be necessary because the loan will have been paid and the home will likely be worth more.
If the seller’s rate is well below current market rates, the blended rate across both loans may still be meaningfully lower than getting a brand-new mortgage at today's rates, even with a second mortgage at a higher rate.
Does the loan term affect the blended rate?
It can, but I didn't include it in this calculator for the sake of simplicity.
However, the loan term does significantly affect both your monthly payment and total interest paid on each loan.
If the two loans have very different terms, the blended rate becomes less useful as a comparison tool because your payment obligations wind down at different times.
This is why looking at total interest paid across both loans over the full loan terms is typically more informative.
Is it better to have two mortgages or refinance into a single loan?
It depends on your situation.
Keeping two mortgages can make sense when you've assumed a low-rate loan from a home seller, if you want to avoid private mortgage insurance (PMI), or when current refinance rates are higher than your blended rate.
Conversely, refinancing into a single loan can make sense if market rates have fallen, allowing you to consolidate and save.
The key is to compare your blended rate and total interest to what you'd be able to get on one new loan today.
Be sure to factor in closing costs associated with a refinance, remaining loan terms, and your overall financial goals before you decide.
