Mortgage Interest Rates Explained

Mortgage interest rates play a major role in determining your monthly payment and the total cost of your home loan. Even small rate changes can make a big difference over time.

Credit score

Your credit score is one of the most important factors affecting your mortgage interest rate. Higher scores generally qualify for lower rates, while lower scores may result in higher borrowing costs.

Down payment

A larger down payment can reduce lender risk and may help you secure a better interest rate. Smaller down payments can increase costs or require mortgage insurance.

Loan type

Fixed-rate and adjustable-rate mortgages price risk differently. Government-backed loans like FHA or VA mortgages may have different rate structures compared to conventional loans.

Loan term length

Shorter loan terms often come with lower interest rates but higher monthly payments. Longer terms reduce monthly payments but increase total interest paid.

Market conditions

Broader economic conditions, inflation, and benchmark interest rates influence mortgage pricing. Rates can change frequently based on market demand.

How to get a better mortgage rate

• Improve your credit score before applying
• Save for a larger down payment
• Compare multiple lenders
• Choose a loan term that fits your budget