Today's Mortgage Rates

Today's Mortgage Rates

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How are mortgage rates calculated?

Economic factors aside, many personal factors affect the interest rate a mortgage lender will give you. Lenders have interest rates they can charge for the "best borrowers," and they adjust rates for the "riskier borrowers." Fortunately, you can control your personal factors, which means you can work on getting the best mortgage rate possible.

Credit Score

A high credit score means you're seen as less of a risk to lenders - you pay your bills on time and don't overextend your credit. When lenders pull your credit, they see you as a responsible borrower with a low mortgage default risk.

This leads lenders to give you a better interest rate closer to the advertised rates because they don't have to adjust for a low credit score. Lenders often change the interest rate significantly when you have a low credit score because you're at a higher risk of default.

Determining what credit score you need to buy a house depends on the loan program. If you want a conventional loan (meaning it won't be government-backed), you'll typically need at least a 620 credit score. If you choose FHA or VA financing, you'll often need a credit score of 580 or higher, though it is possible to qualify in various cases with a lower score.

Taking steps to check and improve your credit will put you in a better position to get a lower rate from your lender.

Down Payment

Lenders want to know that you're invested in the home through a down payment and that you aren't borrowing 100% of the funds. The more you invest in the home, the less likely you will default on your mortgage.

If you put down less than 20% on a home, your mortgage rate may increase, and you'll often need to pay mortgage insurance. Different types of insurance depend on your loan program; some are eventually cancellable, while others are not.

Loan-To-Value Ratio

Lenders also compare your down payment to the loan amount, which is your loan-to-value ratio (LTV). The less money you put down on the home, the higher your LTV becomes, which is a higher risk for the lender.

When you put little money into the home, you have less incentive to keep paying the mortgage when times get tough. If you have your own money invested, you're more likely to do what's necessary to pay off debt.

Lenders charge higher interest rates when the risk of default increases, which is the case with low down payments.

For example, if you make a 3% down payment on a $600,000 loan, you put down just $18,000. But if you make a 20% down payment on a $200,000 loan, you put down $120,000. There's a big difference between losing $18,000 and $120,000. Lenders usually give the borrower with the larger down payment a lower interest rate.


Mortgage lenders care whether your home is your primary residence, a second home, or an investment property. Interest rates are usually lowest on primary residences because it's where you live. You're more likely to make your monthly payments on time because you don't want to lose your home.

If you have a second home or investment property and financial issues, you're more likely to default on the mortgage, putting the lender at risk. Most lenders charge higher mortgage rates to make up for this risk.


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How Can I Estimate My Mortgage Rate?

You can view today's interest rates to see where you might fall. If you aren't sure what type of loan you'd qualify for, consider getting initial approval to determine where you fall. But if you know your credit score and approximate LTV ratio, you can estimate your interest rate using today's mortgage rates.

The Bottom Line: Mortgage Rates Are Determined By Many Factors

Market and personal factors determine your mortgage rate, which will strongly influence the amount of your monthly payment. While you can't do anything about market conditions, you can control the qualifying factors lenders consider when applying for a home loan.

Improving your credit score and saving for a larger down payment are two of the best ways to boost your chances of securing the best mortgage rates. Do you have your finances in good shape and feel ready to lock in your rate? Start your mortgage approval online now.

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