it seem pretty high. Look for loan here where you can compare rate and different option. You can do everything yourself and I think it’s also guarantee on time closing and lowest rate also

If the PMI payments are included in the mortgage loan then yes the lender may write it out that way. However, I have not seen that done and I would have a long detailed talk with them to understand why they do it that way and then do the math yourself to see if the APR actually works out to that once PMI is added to the loan amount.

If the mortgage interest is 6.5%, your APR should be 6.7%. Any higher and you are right to worry.

Unfortunately APR in residential lending must include all costs to the borrower. This could include discount points. On an FHA loan MIP is required regardless of the amount of the down payment. PMI is only applicable to conventional loans as is the 80% or 20% down perspective. Youor broker doesn’t know what they are doing if they told you it was because you didn’t put 20% down. Your payments are based on the 6.5%. APR is simply a way to reflect what the cost of the loan is over a given period of time and amount. If you want to see how complicated the government makes this calculation determination check out the link to the FDIC source.

the APR would also include fees, points, etc

I’m guessing you are paying some points.

It’s not just the mortgage insurance- it’s any closing costs involved which are classified as interest- so any points etc. are added to the APR & that rate is your 1st years combined rate. However, a whole 1% difference seems excessive to me. Mine are usually about 1/2% higher. Sounds like they are hitting you pretty hard on closing costs. Also, I don’t like the sound of your broker saying your rate will be “around 6.5%” tell him to Lock it- FHA rates are rising 6.5 % is actually really good right now. Good luck!