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DictionaryThe buying process

Total interest percentage (TIP): what it means

The total interest percentage (TIP) is a figure on the Loan Estimate and the Closing Disclosure that tells you how much interest you will pay over the life of the mortgage, as a percentage of the amount you borrowed. It is calculated by adding up all the scheduled interest payments and dividing by the loan amount, assuming you pay on time and keep the loan for its full term.

In Spanish it is

Porcentaje total de intereses (TIP)

Also written as: TIP

The full explanation

It is not your interest rate or the APR, and it does not include upfront fees other than prepaid interest. It is most useful for comparing offers.

An example

Gabriel compares two Loan Estimates. One has a lower TIP but also higher upfront fees. Because the TIP leaves those fees out, Gabriel also looks at the APR and the closing costs before choosing.

You will see it in…

  • The Loan Estimate, page 3, in the “Comparisons” table
  • The Closing Disclosure, page 5, in the “Loan Calculations” table
  • The offers you compare from several lenders

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

More words on this topic: The buying process

A young man and a young woman look something up together on a laptop.

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

  1. 1. CFPB · What is the Total Interest Percentage (TIP) on a mortgage? · in English · Verified on October 17, 2026
  2. 2. CFPB · 12 CFR § 1026.37(l)(3): total interest percentage (Regulation Z) · in English · Verified on October 17, 2026
  3. 3. CFPB · 12 CFR § 1026.38(o)(5): total interest percentage on the Closing Disclosure (Regulation Z) · in English · Verified on October 17, 2026