How to Calculate a Blended Rate: Step-by-Step for Loans, Wages & Taxes

Whether you are combining two mortgages, quoting a consulting team, or working out what an overtime-heavy week really pays, calculating a blended rate always comes down to the same three steps. This guide walks through the universal formula once, then applies it to every situation people actually search for — loans, mortgages, hourly rates, consulting, and taxes — with a worked example for each.

The blended rate formula

A blended rate is a weighted average. Each rate is weighted by its size — a balance, a number of hours, or a slice of income — so bigger items influence the result more than smaller ones:

Blended Rate = Σ(Amount × Rate) ÷ Σ(Amount)

That is the entire trick. Everything below is just choosing the right "amount" to weight by.

How to calculate a blended rate in 3 steps

1. Multiply each amount by its rate. For loans: balance × interest rate. For wages: hours × hourly rate.
2. Add the products together.
3. Divide by the total amount (total balance, total hours, or total income).

The result is the single rate that, applied to the whole, produces exactly the same cost or pay as your actual mix.

Example 1: Blended interest rate on two loans

You carry a $300,000 mortgage at 6.50% and a $75,000 HELOC at 7.75%.

Your combined debt costs 6.75% per year — the benchmark any consolidation or refinance offer has to beat. Run your own numbers in the blended rate calculator, or use the dedicated blended rate mortgage calculator for first + second mortgage combinations.

Example 2: Blended hourly rate (overtime)

You earn $25/hr for 40 regular hours and time-and-a-half ($37.50/hr) for 10 overtime hours.

• Regular pay: 40 × $25 = $1,000
• Overtime pay: 10 × $37.50 = $375
• Blended rate: $1,375 ÷ 50 hours = $27.50/hr

That is what the week actually paid per hour. The same weighted-average method sets the FLSA "regular rate" when an employee works two jobs at different rates for one employer — full details in our blended hourly and overtime rate guide, or compute it directly with the blended hourly rate calculator.

Example 3: Blended rate for consulting (and onsite/offshore teams)

Agencies quote one blended rate for a mixed team. Suppose a project uses:

Blended rate: $18,000 ÷ 100 = $180/hr. The identical math prices onsite/offshore engagements: 20 onsite hours at $95 plus 80 offshore hours at $30 blends to $43/hr — the real cost per delivered hour to compare across vendors. For the full breakdown, including rate cards and cost-vs-bill-rate, see how to calculate a blended rate for consulting.

Example 4: Blended tax rate

For taxes, the "amounts" are the slices of your income that fall into each bracket. A single filer with $100,000 of taxable income in 2025 pays 10%, 12%, and 22% on successive tiers, for $16,914 of total tax:

$16,914 ÷ $100,000 = 16.91% blended tax rate, despite being "in the 22% bracket."

The blended tax rate calculator applies the current IRS brackets for you, and our blended tax rate guide covers federal + state combinations.

What about loans with different terms?

The blended rate is a snapshot of today's cost — it ignores how long each loan runs. A 30-year mortgage blended with a 5-year car loan produces a rate that changes as the car loan pays down. For decisions involving mismatched payoff dates, read how to calculate a blended rate with different loan terms, which shows the math over time.

Prefer a spreadsheet?

Excel and Google Sheets compute a blended rate in one cell with SUMPRODUCT:

=SUMPRODUCT(B2:B5, C2:C5) / SUM(B2:B5)

where column B holds balances (or hours) and column C holds rates. Our Excel blended rate guide includes copy-paste formulas for interest, wages, and overtime.

Quick reference

One formula, weighted correctly, answers all of them.

Frequently Asked Questions

What is the formula for calculating a blended rate?

A blended rate is a weighted average: Blended Rate = Σ(Amount × Rate) ÷ Σ(Amount). You multiply each amount by its rate, add the products, then divide by the total amount. The "amount" is whatever you weight by — a loan balance, a number of hours, or a slice of income — so larger items influence the result more.

Why can't I just average the interest rates together?

A simple average ignores the size of each balance. Averaging 6.5% and 8.5% gives 7.5%, but if the 6.5% loan is six times larger, the true blended rate is about 6.79%. Only a weighted average reflects what your debt actually costs, which is why the simple average leads to bad refinancing decisions.

How do you calculate a blended hourly rate with overtime?

Weight each pay rate by the hours worked. For 40 regular hours at $25 plus 10 overtime hours at $37.50, that is $1,000 plus $375, or $1,375 total, divided by 50 hours — a blended rate of $27.50/hr. This same weighted-average method sets the FLSA regular rate when someone works two jobs at different rates for one employer.

Is your blended tax rate the same as your tax bracket?

No. Your blended tax rate is your effective rate across all brackets, always lower than your top bracket. A single filer with $100,000 of taxable income in 2025 pays 10%, 12%, and 22% on successive tiers for $16,914 total tax — a blended rate of 16.91%, despite being "in the 22% bracket."