12 CFR §1026.22 — Determination of annual percentage rate
Regulation Z §1026.22 sets the computational rules and accuracy tolerances for the disclosed Annual Percentage Rate on closed-end consumer credit transactions: the APR must be determined under either the actuarial method or the United States Rule method (appendix J supplies the actuarial-method instructions and equations). General accuracy tolerance is ±1/8 of 1 percentage point; irregular-transaction tolerance is ±1/4 of 1 percentage point. For mortgage loans secured by real property or a dwelling, additional tolerances apply where the APR variance results from a finance-charge variance that is itself accurate under §1026.18(d)(1), §1026.38(o)(2), or §1026.23(g)/(h). Permitted computation tools include the CFPB-issued APR Tables and any other computation tool whose result matches appendix J within the accuracy tolerances. Subsection (c) addresses single add-on rate transactions; (d) addresses certain ranges-of-balances transactions (e.g., mail/telephone-order delays under §1026.17(g)(4), series-of- sales delays under §1026.17(h)). The (a)(1) calculation-tool error safe harbor requires prompt discontinuation upon discovery and written Bureau notification.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1026.22 — Determination of annual percentage rate — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1026.22(a)(1) — APR shall be determined under the actuarial method or the United States Rule method
The annual percentage rate is a measure of the cost of credit, expressed as a yearly rate, that relates the amount and timing of value received by the consumer to the amount and timing of payments made. The annual percentage rate shall be determined in accordance with either the actuarial method or the United States Rule method. Explanations, equations and instructions for determining the annual percentage rate in accordance with the actuarial method are set forth in appendix J to this part.
12 CFR §1026.22(a)(2) — General APR accuracy tolerance: ±1/8 of 1 percentage point
As a general rule , the annual percentage rate shall be considered accurate if it is not more than
12 CFR §1026.22(a)(3) — Irregular-transaction APR accuracy tolerance: ±1/4 of 1 percentage point
For purposes of this paragraph (a)(3), an irregular transaction is one that includes one or more of the following features: multiple advances, irregular payment periods, or irregular payment amounts (other than an irregular first period or an irregular first or final payment).
12 CFR §1026.22(a)(4) — Mortgage-loan APR additional tolerance derived from accurate finance charge
Mortgage loans. If the annual percentage rate disclosed in a transaction secured by real property or a dwelling varies from the actual rate determined in accordance with paragraph (a)(1) of this section, in addition to the tolerances applicable under paragraphs (a)(2) and (3) of this section, the disclosed annual percentage rate shall also be considered accurate if:
12 CFR §1026.22(a)(4) — Mortgage-loan APR additional tolerance derived from accurate finance charge — enumerated items (chapeau recall fix)
(i) The rate results from the disclosed finance charge; and (ii) (A) The disclosed finance charge would be considered accurate under § 1026.18(d)(1) or § 1026.38(o)(2) , as applicable; or (B) For purposes of rescission, if the disclosed finance charge would be considered accurate under § 1026.23(g) or (h), whichever applies.