Mortgage rates by credit score: Here’s what your score gets

By: Peter Warden Updated By: Ryan Tronier Reviewed By: Paul Centopani
December 22, 2023 - 12 min read

What mortgage rate will I get with my credit score?

Mortgage rates by credit score can vary significantly; if you have a credit score of 740 or higher and your finances are solid, you’re likely to get some of the lowest rates available.

However, this isn’t always the case. Some loan types offer below-market mortgage rates even with moderate credit scores. And many factors besides credit score impact your rate, too.

So explore all your options to make sure you’re getting the lowest rate possible for your credit score.

Find your lowest mortgage rate. Start here

In this article (Skip to...)

Understanding credit scores and mortgage rates

Does your credit score affect the interest rate on your mortgage? Absolutely.

This score is a numerical measure of your creditworthiness, based on your credit history. Higher scores often lead to lower interest rates on a mortgage, indicating to lenders that you’re a lower-risk borrower. Conversely, a lower score might mean higher interest rates due to perceived higher risk.

Credit scores are determined by credit bureaus like Equifax and Experian. They consider factors like your payment history, the total amount of debt you have, the types of credit you use, and the length of your credit history. This comprehensive assessment helps lenders evaluate the risk of lending to you.

Check your home buying options. Start here

Mortgage rates are based on credit score tiers

Mortgage rates are influenced by your “credit tier,” determined by your FICO score. FICO, which stands for Fair Isaac Corporation, is a credit score model used by many lenders to assess credit risk. Generally, a higher FICO score equates to lower mortgage rates.

Credit tier breakdown for mortgage rates:

  • ≥ 740: Lowest mortgage rates
  • 720-739
  • 700-719
  • 680-699
  • 660-679
  • 640-659
  • 620-639
  • < 620: Highest mortgage rates

It’s important to note that while the Federal Housing Administration (FHA) might lend to borrowers with scores as low as 580 under certain conditions, conventional loans, which conform to Fannie Mae and Freddie Mac guidelines, usually require a minimum score of 620.

First-time home buyers with scores below 620 might need to explore FHA loans, or VA loans if they have a military service history.

Why your credit tier matters

The fact that lenders use credit tiers to determine rates is very important. It means you might be able to secure a lower rate without improving your score all that much.

Suppose your current score is 718 or 719. You’d have to move it up only a point or two to get yourself into a higher tier with a lower mortgage rate. And most of us can move our scores a few points within a month or two.

However, the opposite is true, too.

Lenders routinely make a final check on your credit score in the last few days before closing. And if your score has fallen into a lower tier, you might face a higher mortgage rate. So be careful not to open new credit lines, miss payments, finance big-ticket items, or do anything else that could harm your score prior to closing.

Average mortgage rates by credit score

There’s often a stark difference between mortgage interest rates at the highest and lowest ends of the credit score spectrum. And that equates to a big difference in monthly mortgage payments and long-term interest costs for homeowners.

Verify your home buying eligibility. Start here

Here are a few examples to show how those differences in credit score can impact your mortgage costs.

Mortgage rates by credit score

FICO, the biggest credit scoring company in America, has a handy online calculator that shows just how much mortgage rates vary by credit score.

As an example, here’s how average annual percentage rates (APRs) stacked up by credit score at the beginning of 2024. Keep in mind that rates change constantly and will likely be different by the time you read this. These numbers are meant only as a sample to show you how much rates can vary.

FICO ScoreMortgage APR*

*Average APR from is for sample purposes only and based on a 30-year fixed-rate mortgage. Your own interest rate will be different. Rates sourced on February 1, 2022.

Mortgage payments by credit score

According to the Mortgage Bankers Association, the average loan amount for a home purchase was $390,049 in November 2023.

We’ll use that loan amount, and the APR estimates from FICO (above), as an example to show how credit tiers impact mortgage payments and long-term interest costs.

FICO ScoreMortgage APR*Monthly Payment*Total Interest (30 Years)*

*Payment examples and APRs sourced from in December 2023. Payments based on a loan amount of $390,049 and a 30-year fixed-rate mortgage loan. Your own interest rate and monthly payment will be different.

Compare mortgage rate quotes from multiple lenders. Start here

If you compare the highest and lowest credit score tiers, the borrower with better credit saves about $418 per month and $150,000 in total interest over the life of their mortgage loan.

Of course, most people fall somewhere in between those two extremes. But the point is, your credit can have a big impact on both your interest rate and the amount of interest you’re paying to your mortgage lender.

If you’re able to boost your score before applying for a home loan, it could lead to serious savings over the next few decades.

Current mortgage rates

Today’s mortgage rates are influenced by the Federal Reserve’s adjustments of the federal funds rate. This is the rate banks charge each other for overnight loans.

  • When the Fed raises this rate, mortgage rates usually go up. This means higher monthly payments for homeowners.
  • When the Fed lowers the federal funds rate, mortgage rates often drop, making home loans cheaper.
Find your lowest mortgage rate. Start here

These national average rates affect how much home buyers can afford, which can change demand in the housing market. Understanding these rates is key for those looking to make informed decisions about homeownership.

Conventional 30-year fixed rate % (% APR) 
Conventional 15-year fixed rate % (% APR) 
FHA 30-year fixed rate % (% APR) 
FHA 15-year fixed rate % (% APR) 
VA 30-year fixed rate % (% APR) 
VA 15-year fixed rate % (% APR) 

*Current mortgage rates and annual percentage rates for sample purposes only. See our full list of interest rate assumptions here.

Why your credit score impacts your mortgage rate

Your credit score is a numerical representation of the items on your credit report. Lenders report your loans and payments to credit bureaus and those are listed on your report.

Then an algorithm crawls over your report, assigning numerical values to each item. So you get negative points for late payments and other “bad” behavior. And you get positive points for on-time payments and other “good” behavior.

Verify your home buying eligibility. Start here

The goal of your credit score is to determine how responsible or irresponsible you are as a borrower. This can help lenders decide how ‘risky’ your loan is and what interest rate to charge you.

Type of loan

Home buyers with low credit scores are excluded from some types of mortgages.

  • Conventional loan: Typically requires a minimum credit score of 620.
  • Fannie Mae HomeReady: Minimum credit score of 620 is usually required.
  • Freddie Mac Home Possible: Generally requires a minimum credit score of 660.
  • FHA loan: Minimum credit score of 580 for a 3.5% down payment; 500 for a 10% down payment.
  • VA loan: No official minimum credit score, but lenders typically prefer 620 or higher.
  • USDA loan: Most lenders require a minimum credit score of 640.

If your score is between 580 and 619, you probably have no choice but to go with an FHA mortgage. Fannie and Freddie’s policies pretty much exclude anyone with a score below 620 from a conventional loan.

And there can be real disadvantages to that. FHA loans are very popular and are good for many borrowers. But, unlike Fannie and Freddie’s mortgages, they charge mortgage insurance payments until you move, refinance, or finish paying off your loan.

Meanwhile, jumbo loans, which let you borrow millions, tend to have considerably higher credit score thresholds than other mortgages. Although some individual lenders may now be less demanding, they will almost inevitably charge higher rates to those with lower scores.

Risk-based pricing

Conventional mortgage loans — the most common type of home loan — are also subject to “risk-based pricing,” which factors your credit score into your rate and fees.

One federal regulator, the Consumer Financial Protection Bureau (CFPB), defines risk-based pricing thus:

“Risk-based pricing occurs when lenders offer different consumers different interest rates or other loan terms, based on the estimated risk that the consumers will fail to pay back their loans.

“Each lender uses its own process to determine the risk that you will default on a loan, but most use your credit score, employment status, income, and other outstanding debts, among other factors.”

That second paragraph is important. If each lender uses its own processes to decide on the risk you pose, you might get a better rate with the same score from one lender than another.

That’s why it’s so important to shop around for your mortgage. Every lender is different, and you won’t know which one can offer you the best rate until you’ve compared personalized quotes.

Other factors that affect your mortgage rate

While credit scores are a key component in determining your mortgage rate, there are several other factors that lenders take into account. These elements can significantly influence the rate you’re offered and ultimately affect your monthly payments and the total cost of your mortgage.

Down payment amount

The size of your down payment plays a significant role in determining your mortgage rate, as it directly impacts the loan-to-value ratio (LTV).

The LTV ratio is a measure of how much of the home’s value you are borrowing compared to the value of the property.

For example, if you buy a home priced at $300,000 and make a down payment of $60,000, your loan amount will be $240,000. This results in an LTV ratio of 80% (since $240,000 is 80% of $300,000).

A higher down payment typically means a lower LTV ratio, which reduces the lender’s risk. This reduction in risk can often lead to a lower interest rate for the borrower. Conversely, a smaller down payment leads to a higher loan-to-value ratio, signaling higher risk to the lender, which may result in a higher interest rate on the mortgage.

Loan amount

The total amount you borrow, which is influenced by the home price, can also impact your mortgage rate. Essentially, larger loan amounts can sometimes lead to higher interest rates, as they represent a greater risk to the lender.

For instance, if you’re purchasing a high-priced home and therefore borrowing a larger sum, the lender might view this as a higher risk compared to a smaller, more modest loan.

  • This is because, in the event of a default, a larger loan represents a bigger potential loss for the lender. To offset this risk, lenders might charge a higher interest rate on larger loan amounts.
  • On the other hand, smaller loan amounts typically carry less risk and might qualify for lower interest rates.

Debt-to-income ratio

Your debt-to-income ratio (DTI) is a key metric lenders use to assess your personal finances. It compares your total monthly debt payments to your gross monthly income.

A lower DTI ratio is often seen as a positive indicator by lenders, suggesting that you have a good balance between debt and income. This balance can lead to lower mortgage rates, as it signals a lower risk of default and a stronger capacity to manage additional loan repayments.

To improve your DTI ratio and potentially secure better mortgage rates, consider the following strategies:

  • Pay down existing debt: Reducing your outstanding debts, especially high-interest debts like credit cards, can lower your DTI.
  • Increase your income: If possible, seek ways to boost your income, whether through a higher-paying job, extra work, or a side business.
  • Avoid new debt: Before applying for a mortgage, it’s wise to avoid taking on any new significant debts, like auto loans or large credit card purchases.
  • Consolidate or refinance debts: Refinancing multiple debts into a single loan with a lower interest rate can reduce your monthly payments.
  • Create a budget: A well-planned budget can help you manage your finances more effectively, potentially freeing up more income to pay down debts.

Discount points

Buying discount points, also called mortgage points, upfront can lower your mortgage rate. Discount points are fees paid directly to the lender at closing in exchange for a reduced interest rate. This can be a strategic way to lower your overall interest costs over the life of the loan.

Buying discount points is akin to prepaying interest on your mortgage.

  • For example, one point typically costs 1% of your loan amount and might reduce your interest rate by about 0.25%.
  • If your loan amount is $300,000, one point would cost $3,000. This upfront payment could reduce your interest rate from, say, 7.5% to 7.25%, lowering your monthly payments and saving you money over the term of the loan.

To understand how buying points might affect your mortgage, use our mortgage calculator. It can help you weigh the upfront cost of points against the long-term savings in interest, giving you a clearer picture of whether this option is financially beneficial for you.

Closing costs

Closing costs, including origination fees and other out-of-pocket expenses, can influence your mortgage rate.

For example, if you choose not to pay these fees upfront and instead roll them into the loan, it can result in a higher interest rate. The decision on how to handle closing costs should be made after considering both short-term financial impacts and long-term costs.

How to get the best mortgage rate for your credit score

Comparison shopping for your mortgage can make a huge difference. The CFPB said in 2018, “Previous Bureau research suggests that failing to comparison shop for a mortgage costs the average homebuyer approximately $300 per year and many thousands of dollars over the life of the loan.”

Find your lowest mortgage rate. Start here

But before you even get to the mortgage shopping phase, you can work on improving your odds for a lower rate.

For example, if you save enough for a down payment amount that’s bigger than the minimum required, you might get a lower rate, even if your credit score is unimpressive.

And the same applies if you have few existing debts. People with low debt-to-income ratios are more likely to be able to afford their new mortgage payments than those already struggling to stay afloat.

Lenders take both those factors into account, alongside your credit score, when deciding on the mortgage rate to charge you.

Tips to boost your credit score

And, of course, you can boost your credit score through your own efforts. A few of the most impactful steps you can take to raise your credit prior to applying for a mortgage include:

  1. Pay every bill on time
  2. Reduce your credit card balances. Make sure each card stays below 30% of its respective credit limit
  3. Avoid opening or closing any credit accounts, except installment loans that are being paid off

You should also order a copy of your credit report from That site is owned by the big three credit bureaus. And you’re legally entitled to a free copy of your report each year.

Many reports contain errors. And it can take months to get them corrected. So start the process early.

FAQ: Mortgage rates by credit score

What mortgage rate can I get based on my credit score?

The mortgage rate you can get largely depends on your credit score. Generally, a higher credit score means a lower mortgage rate. Those with excellent credit (720 and above) usually secure the best rates. Good credit scores (690-719) often lead to competitive rates, while average scores (630-689) might attract slightly higher rates. For scores below 630, rates tend to be significantly higher, reflecting the higher lending risk.

What credit score do you need for a mortgage?

To qualify for a mortgage, lenders typically look for a minimum credit score of 620 for conventional loans. However, some loan types, like FHA loans, may accept scores as low as 500 with a larger down payment. It’s important to remember that while a lower credit score can still secure a mortgage, it generally results in higher interest rates and potentially more costly loan terms.

How do adjustable rate mortgages affect homeowners with varying credit scores?

Adjustable-rate mortgages (ARMs) usually start with lower rates, which benefits home buyers with good credit scores as it saves them money at first. But for people with lower credit scores, these mortgages can end up costing more over time and can be riskier because the rates can change a lot.

Check your mortgage rates by credit score

Understanding the impact of your credit score on your home-buying budget is important, but remember, it’s just one piece of the puzzle.

Along with mortgage rates by credit score, lenders also consider factors like loan type and term length (such as 30 or 15 years), as well as the current state of the real estate market. Even if you have a lower credit score, there are strategies like obtaining a rate lock to secure a competitive rate from the best mortgage lenders.

Eager to discover what mortgage rate you qualify for? Consider applying for mortgage preapproval or click the links below to compare rate quotes from multiple lenders, without any commitment.

Time to make a move? Let us find the right mortgage for you

Peter Warden
Authored By: Peter Warden
The Mortgage Reports Editor
Peter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.