How to find a good mortgage rate
A “good” mortgage rate is different for everyone.
In today’s market, a good mortgage interest rate can fall in the mid-7% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circumstances.
To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them. This will show you the range of interest rates you’re eligible for and help you pick the cheapest lender for your situation.Find your lowest mortgage rate. Start here
In this article (Skip to...)
- Today’s best rates
- Current rate trends
- ’Good’ rates vary a lot
- Credit score and rates
- Current rates can be deceptive
- How to find the best rate
- Tips to lower your rate
What is a good mortgage rate today?
Mortgage rates change all the time. So a good mortgage rate could look drastically different from one day to the next.
Right now, good mortgage rates for a 15-year fixed loan generally start in the high-6% range, while good rates for a 30-year mortgage typically start in the mid-7% range.Find your lowest mortgage rate. Start here
When this was written on November 15, 2023, the average 30-year fixed rate was 7.5% and the average 15-year was 6.81%, according to Freddie Mac’s weekly survey. That represents all sorts of borrowers, and those with strong finances can often get rates well below average.
Top-tier borrowers could see mortgage rates in the mid-7% range, while lower-credit and non-QM borrowers could expect rates well above 8%. Of course, mortgage rates are famously volatile and it’s possible a good mortgage rate next year might be substantially higher than what it is today. However, most analysts expect mortgage rates to range between 6% to 7% in 2024, depending on the source.
Current mortgage rate trends
The mortgage or refinance rate you get depends greatly on your personal finances. But the overall market provides context for your individual rate.Get started shopping for mortgage rates
In 2021, mortgage rates remained historically low, with the average 30-year fixed-rate mortgage hovering around 2.96% for much of the year. However, in 2022, rates experienced a notable increase due to factors like inflation and Federal Reserve actions, climbing from 3.22% in January to a high of 7.08% by October.
Currently, mortgage rates have surged back up, hovering around the mid-7% mark. The recent fluctuations in the market add complexity to forecasting the future path of mortgage rates. However, if inflation continues to decrease, it’s likely to push mortgage rates lower at some point next year.
We are at this critical juncture. Mortgage rates can either break higher, up to 8%, or lower, to 6.5%. — Lawrence Yun, Chief Economist at NAR
Good mortgage rates look different to everyone
What is a good mortgage rate? That’s a tricky question. Because many of the rates you see advertised are available only to “prime” borrowers: those with high credit scores, few debts, and very stable finances. Not everyone falls into that category.Find your lowest mortgage rate. Start here
Of course, you can look at average mortgage rates. But how reliable are those as a guide?
On November 15, 2023, Freddie Mac’s weekly average for a 30-year, fixed-rate mortgage was 7.5%. But the daily equivalent from The Mortgage Reports’ rate survey was 7.721% (7.75% APR). So there’s a definite variance across the market.
How to navigate current mortgage rates
The trick is getting rate estimates from multiple mortgage lenders and comparing them side by side to find your best rate. It’s not a question of what’s a good rate in general, but rather, what’s a good rate for you personally.
Keep in mind that your mortgage interest rate depends on a number of factors, including:
- How strong your finances are: Lenders look at your financial situation, including your credit score, down payment, existing debt burden, and the consistency of your income. A credit score above 720 and a down payment of 20% typically earn you the best rates, but you can qualify for a home loan with far less
- Which mortgage lender you choose: Only by shopping around and getting rate quotes from several lenders can you be sure you’re getting the best possible deal
- What type of mortgage you want: Each type of loan comes with a different average rate: conventional, conforming, FHA, VA, USDA, and jumbo loans. And adjustable-rate mortgages usually have a lower rate lock for the first few years
- Your loan term: The length of your loan makes a difference, too. Shorter-term loans (for instance, a 15-year mortgage) typically have lower interest rates than 30-year loans
- Your loan's purpose: Rates vary based on your loan purpose; for instance, cash-out refinance loans have higher rates than no-cash-out refinances
There are many variables affecting your interest rate. An attractive rate for one borrower may be way too high for another. And all lenders weigh these factors differently. Making the same application with three different lenders will likely get you three different rates and sets of fees.
That’s why experts say it’s so important to shop for your rate. There’s no way to know what a good mortgage rate looks like until you’ve compared your options.
Credit score and mortgage rates
Your credit score is one of the biggest factors in determining your mortgage rate, especially if you use a conventional loan.Get started shopping for mortgage rates
FICO has a tool to estimate mortgage rates based on credit, and it shows how big a difference your score can make when it comes to your interest rate. Here were FICO’s annual percentage rate (APR) estimates for different credit tiers on November 15, 2023:
|Credit Score Range||30-Yr Mortgage APR*|
*Mortgage rates are based on national averages and estimated by myFICO.com. Your own interest rate will be different
What’s that in dollars?
Say you’re getting a 30-year, fixed-rate mortgage with a loan amount of $300,000.
Someone with the lowest of those APRs (7.219%) would pay around $417,098 in interest over the life of the loan, according to FICO. But someone whose score is in the 620-639 range would pay closer to $531,947 in total interest payments for the same home price.
Over time, what might look like a relatively small rate difference can add up to huge savings.
Other factors besides your credit score
Remember, FICO is looking only at the difference your credit score makes in the chart above. But lenders will check more than your credit history when you apply for a new mortgage loan. They will also need to know your:
- Debt-to-income ratio (DTI): This ratio measures how much of your income goes toward existing monthly debts
- Income stability: Homebuyers need to show W-2 forms or pay stubs to prove a steady income. If you’re self-employed, you can provide tax forms or even bank statements
- Down payment: Most loans require a minimum down payment amount (USDA and VA loans are an exception). Putting more than the minimum down could help lower your interest rate
- Home equity for refinancing: Mortgage refinance lenders will check your home equity which measures how much your home value exceeds your mortgage debt. Having more equity can lower your rate
In short, the better your personal finances look, the lower your mortgage interest rate. Raising your credit score or saving for a more significant down payment before you buy can help you get the best rates available.
Current mortgage rates can be deceptive
Shopping around for a mortgage rate means applying with multiple lenders and getting personalized quotes. It means more than simply looking online and picking the lender with the lowest advertised rates.Find your lowest mortgage rate. Start here
Why? Because lenders tend to base their advertised rates on ‘ideal’ borrowers. They often include points that lower your mortgage interest rate but increase your upfront fees. Unless you have great credit, a significant down payment, and don’t mind paying extra closing costs, you probably won’t get those advertised rates.
The same applies to average rates. By definition, some borrowers will qualify for lower rates and some will get higher ones. What you’ll be offered will depend on your situation and personal finances.
A note on discount points
Here’s an insider tip when comparing mortgage rates: lenders often advertise rates based on the assumption that you will buy discount points. Those discount points are an extra sum you can choose to pay at closing to shave a little off your mortgage rate.
Often, you pay 1% of the loan amount to reduce your interest rate by about 0.25 percent. Therefore, on a $300,000 loan, you might pay $3,000 to reduce your 7.75% rate offer to 7.5 percent.
There’s nothing wrong with these points (provided you have the spare money), and they’re often a good idea. But comparing an advertised rate that assumes you’ll buy discount points with ones that don’t make the same assumption is like comparing apples with oranges. You won’t get a fair answer.
How to find the best mortgage rate for you
Different lenders will look at your financial circumstances in different ways.
For example, a lender specializing in FHA loans (home loans backed by the Federal Housing Administration) will rarely raise an eyebrow if your credit score is in the 580 to 620 range. But one that caters to super-prime borrowers likely won’t give you the time of day.Check rates from multiple lenders. Start here
Ideally, you want a mortgage lender that is used to dealing with people who are financially similar to you. And the best way to find your ideal lender is by comparing loan offers. Here’s how to do that.
Compare Loan Estimates
The only way to find out is to apply to multiple lenders for quotes (officially called Loan Estimates). It doesn’t take long. And the amount you stand to save can easily add up to thousands of dollars.
Don’t worry about the negative impact on your credit score when you compare rates.
If you submit all your loan applications within a focused period (a month or less), your score should take the same tiny hit for ten applications as for one. That’s because scoring technologies allow for rate shopping for certain types of borrowing, including home loans.
Negotiate with lenders
You’ll get a quote for each loan application you fill out. Nowadays, these all come in the same standard format — the ‘Loan Estimate’ — so they’re easy to compare side by side.
But you don’t have to stop at choosing the lowest quote. You’re always free to ask for better terms.
A good tactic can be to leverage one lender against another. You can drive down your rate or closing costs by showing your preferred lender a better offer and asking them to match it.
Look at interest rate and APR
Most borrowers tend to focus on mortgage rates. But the APR you pay on a loan is often just as or even more important than the basic interest rate.
The annual percentage rate (APR) looks at all your costs of borrowing (including interest) and spreads them over the potential life of your loan. So APRs are higher than straight rates. And they can tell you about what you’re actually going to pay.
Just note, APR assumes you’ll keep your loan its full term, which most borrowers don’t. They either sell or refinance before the mortgage term ends.
So look at APR, but remember that it’s not always the last word on what you’ll pay. You can learn more about how to compare interest rates and APR effectively in this article.
Pay attention to mortgage insurance
If your down payment is less than 20% of the purchase price, you’ll typically have to pay private mortgage insurance (PMI). And those premiums can add significantly to your monthly payments.
The cost of mortgage insurance will be reflected in your APR but not in your interest rate. The same goes for an FHA loan’s mortgage insurance premiums (MIP). So make sure you learn about the cost and benefits of mortgage insurance before you commit to a loan.
Strategies to get a lower interest rate
Here’s a recap of the best strategies to get a lower interest rate and save on your mortgage loan:
- Choose the type of mortgage that suits your needs best. Your loan officer can help you decide
- Shop around for the best deal. You could save substantially
- Compare your mortgage Loan Estimates carefully. Pay close attention to the APR and the total you’ll pay in the first five years of your loan
- Negotiate. Don’t be afraid to ask lenders for a better rate or lower fees
- Buy discount points if you can comfortably afford them
If you have extra time before you plan to buy or refinance, you can also:
- Boost your credit score before you apply
- Reduce your debts before you apply
- Save a bigger down payment. The higher your down payment, the lower your mortgage rate is likely to be
With those last three, there’s only so much you can do. Few of us could save more at the same time we’re paying down debt.
But prioritize areas where you have the most room to grow as a borrower. Do what you can because even a little can help a lot.
Mortgage rates FAQ
Mortgage rates climbed continuously since last year, more than doubling from 3 percent to 7 percent. In 2023, we’ve mostly seen mortgage rates ping pong between the 6% to mid-7% rage. Your best mortgage rate will depend on your personal credit profile, down payment amount, income, and current debt load. Even your loan term affects your mortgage rate. Shorter-term loans tend to offer lower rates.
The Covid pandemic pushed mortgage rates to record lows, which meant the most qualified borrowers were able to get rates below 4.75 percent throughout 2021. However, they have risen to the mid-7 percent mark in late 2023, and a 4.75 percent rate would not be possible to secure in today’s market environment.
2.65 percent is the lowest average mortgage rate ever recorded by Freddie Mac’s Primary Mortgage Market Survey on conventional 30-year fixed-rate mortgages. Rates hit this level in the first week of 2021.
The best APRs closely resemble the best interest rates. APR, or annual percentage rate, includes your mortgage interest rate and additional costs such as discount points and mortgage insurance. If there’s a more significant gap between your APR and your interest rate, you’re paying more in fees.
The answer depends on how long you plan to keep the loan. APR measures your total borrowing costs over the life of the loan, so if you pay off the loan early, you won’t pay the full APR. Page 3 of your Loan Estimate will show the cost of the loan over its first five years. Comparing five-year costs is helpful because most homeowners don’t keep a mortgage for its entire term.
Good and bad interest rates depend on your personal financial situation. A bad interest rate for one borrower could be a great interest rate for another. To get the best rate for someone with your credit profile, shop around with at least three different mortgage lenders. Compare origination fees, processing fees, and underwriting fees as well as rates.
VA loans excel at giving borrowers the most competitive rates. Only veterans, active-duty military members, and some surviving spouses of veterans can qualify. For homebuyers with credit challenges, an FHA loan can often provide the lowest mortgage rate. Someone with a large down payment and excellent credit can usually get the most competitive rate from a conventional loan.
Shop around to find your best interest rate
Mortgage lenders personalize your interest rates based on your credit history and other factors, including your credit score and loan-to-value ratio. So you won’t know your rate options until you apply and get pre-approved.
Your first quote may not be your best interest rate. Be sure to apply with several lenders so you can compare Loan Estimates and find your best deal.Time to make a move? Let us find the right mortgage for you