Today's Conventional Mortgage Rates

How Conventional Loan Rates Work

Conventional mortgage rates are determined by lenders and change based on market conditions and borrower qualifications. The displayed above update regularly and reflect current pricing assumptions.s.

A conventional home loan is a mortgage that isn’t backed by a government agency. Many conventional loans conform to guidelines used by Fannie Mae and Freddie Mac, including staying within conforming loan limits set by the Federal Housing Finance Agency.

Conventional rates move with the broader mortgage market. Even when rates feel steady, daily pricing can shift based on bond market activity and lender pricing adjustments.

Rates can also vary based on your credit, down payment, and debt, which means the rate you see advertised might not match your final rate. Your interest rate and Annual Percentage Rate, or APR, may differ. APR includes the interest rate plus certain loan costs.

Factors That Affect Your Conventional Loan Rate

Conventional mortgage rates are shaped by both market forces and borrower-specific risk factors.

Broader economic factors like the bond market, inflation, and Federal Reserve policy can have an impact on rates. But your personal situation also plays an important role in shaping your rate.

Credit score: Higher credit scores generally qualify for stronger pricing. Credit also influences whether you receive additional pricing adjustments that can increase the cost of the loan.

Down payment: A larger down payment reduces lender risk and can improve pricing. It may also reduce or eliminate the need for private mortgage insurance, depending on the loan structure.

Debt-to-income (DTI):Lower debt relative to income typically improves approval odds and can help with pricing. Paying down revolving balances can help both your debt-to-income (DTI) ratio and credit utilization.

Loan term: Shorter terms often have lower rates than longer terms, but higher monthly payments. The best mortgage term depends on your budget and how long you plan to keep the home.

Residence type: Primary residences often price more favorably than second homes or investment properties. Multi-unit properties may have different pricing adjustments as well.

Points and fees: Discount points may reduce your rate in exchange for a higher upfront cost. Lender credits can reduce cash due at closing, but may increase the rate. Reviewing APR and the Loan Estimate helps clarify the trade-off.

How to Improve Your Rate

Because your personal financial situation has such a major impact on your rate, there are steps you can take to improve your rate.

That includes correcting credit report errors and avoiding new debt before applying, paying down existing debt, increasing cash reserves, and considering a slightly larger down payment.

Frequently Asked Questions

How Do Credit Scores Affect Conventional Mortgage Rates?

Higher credit scores generally improve pricing and can reduce loan-level pricing adjustments. Lower scores may increase rates or fees and can affect mortgage insurance costs.

Does A Larger Down Payment Always Lower The Rate?

A larger down payment often improves pricing because it reduces loan-to-value, but the effect varies. In some cases, the biggest benefit is reduced mortgage insurance rather than a major rate change.

When Should I Consider Refinancing A Conventional Loan?

Refinancing can make sense when the new loan improves your total cost after fees and you expect to keep the home long enough to reach your break-even point. Reviewing multiple scenarios is often more useful than relying on a single rate-change rule.