Current Mortgage Rates
Compare today's mortgage and refinance rates
Updated: January 25, 2022
As of today, January 25, 2022, the best 30-year fixed mortgage rate is 3.74%, based on the average of the lowest rates in each of the 50 states and Washington, D.C. The best FHA 30-year fixed rate is 3.65%, jumbo 30-year fixed is 3.51%, 15-year fixed is 2.93%, and 5/1 ARM is 2.53%. Our rates may differ from what you see in online advertisements from lenders because they are based on real lender quotes for borrowers with good credit, not niche rates unavailable to most people. Check out the Methodology section of this page to learn more about what makes our rates different.
Mortgage rates represent the interest charged by a lender on a mortgage loan and help homebuyers understand what it costs to borrow money to finance a home each year. When setting rates, lenders consider the amount of risk that’s associated with the loan. Typically, loans to borrowers with good credit or loans with shorter repayment terms come with a lower level of risk, and the rates are lower than those for higher-risk loans, e.g., mortgages to people with bad credit.
There are good mortgage options available to people with a wide variety of circumstances. Even people with credit issues or who don’t have a lot of money for a down payment can potentially get financing via programs built specifically for them, such as FHA loans. If you’re looking to buy a home, make sure to do your homework so you can get the best mortgage rate that’s possible.
Today's Mortgage Rates
|FHA 30-Year Fixed||3.65%||3.88%|
|VA 30-Year Fixed||3.69%||4.07%|
|Jumbo 30-Year Fixed||3.51%||3.55%|
|Jumbo 15-Year Fixed||3.19%||3.37%|
|Jumbo 7/1 ARM||2.48%||2.77%|
|Jumbo 7/6 ARM||2.78%||3.05%|
|Jumbo 5/1 ARM||2.32%||2.62%|
|Jumbo 5/6 ARM||2.81%||2.93%|
Frequently Asked Questions (FAQs)
Written by Megan Hanna
What Is a Mortgage Rate?
A mortgage rate represents the percentage rate of interest charged on a loan to finance real estate. These rates can be fixed or variable. With a fixed-rate mortgage, the rate is fixed for the entire repayment term, meaning the principal and interest (P&I) payments won’t change during the loan’s life. With a variable-rate mortgage, also known as an adjustable-rate mortgage (ARM), the interest rate will adjust at set intervals (e.g., after five years and then annually with a 5/1 ARM). When the rate adjusts, the interest portion of the P&I payment will increase or decrease depending on the direction of the rate change.
Before selecting a variable mortgage rate, it’s important to make sure you’re comfortable with potential fluctuations in your P&I payment.
How Are Mortgage Rates Set?
Mortgage rates are set by lenders and vary based on such factors as the loan’s repayment term, the property’s characteristics, the borrower’s creditworthiness, including credit score and debt-to-income ratio (DTI), as well as economic conditions and federal monetary policy.
Borrowers with good credit scores and low debt-to-income ratios typically get lower rates, as do loans with shorter repayment terms. Loans to finance primary residences will typically carry better interest rates than loans to finance secondary residences or vacation homes, and rates are typically lower with larger down payments. These factors are considered less risky by lenders, so the mortgage rates you can get are lower. It’s possible to get a better rate by working to improve each of these areas.
In addition to factors borrowers can control, mortgage rates are also influenced by economic conditions and the Federal Reserve’s monetary policies. The Federal Reserve uses monetary policy to influence what’s happening in the market, primarily inflation and the level of employment.
Does the Federal Reserve Decide Mortgage Rates?
While the Federal Reserve doesn’t directly set mortgage rates, it has a strong influence on the interest rates lenders decide to charge via its monetary policy, which can include the Federal Reserve influencing the level of employment and how much inflation exists in the U.S. economy. The Federal Reserve typically accomplishes these by setting policies that will affect how much it costs to borrow money and how much credit is available.
One of the main ways that the Federal Reserve enacts this is by making changes to the federal funds rate, which is the rate that banks must pay when they need to borrow money overnight from the federal funds market. By changing the federal funds rate, the Federal Reserve directly affects how much it costs a bank to borrow money. When the rate increases, the bank’s cost of borrowing increases and vice versa. Banks pass these costs on to their borrowers via the interest rates charged on loans.
Banks often need to borrow money overnight from the federal funds market, so they have enough cash on hand to meet the regulatory reserve requirements. The federal funds rate is a determining factor in how much it costs a bank to borrow this money. In turn, the bank’s cost of money influences the interest rate it’s willing and able to accept on loans issued to borrowers.
For this reason, if the federal funds rate increases, an increase in interest rates will usually follow. This is because an increase in the federal funds rate means it costs more for banks to borrow money from the federal funds market. Banks pass on this increased cost of borrowing by increasing the interest rates on the loans they issue. Conversely, if the federal funds rate decreases, you can usually expect interest rates to decrease following the same logic.
What Are the Benefits of Refinancing to a Lower Mortgage Rate?
Some of the key benefits of refinancing to a lower mortgage rate are that you can:
- Pay less interest over time: If you’re able to refinance to a lower mortgage rate, you’ll end up paying less interest over time than if you kept your old rate. For example, if you have a $250,000 mortgage with a 30-year fixed-rate term, you would pay $289,595.47 in interest over the 30-year term. The same mortgage with a rate of 3% would only have $129,443.63 in total interest over 30 years.
- Lower your payment: If you want to lower your P&I payment, getting a lower mortgage rate might help. The monthly P&I payment for a $250,000 loan with a fixed rate of 6% and a 30-year term would be $1,498.88. If you refinance the loan after five years to a 25-year fixed-rate loan with a 3% rate, your P&I payment would be reduced to $1,103.19, and you would still pay off the loan in the same amount of time.
- Potentially pay your loan off more quickly: Using the same example, let’s say you decide to shorten your originally $250,000 mortgage to a 15-year term after paying on it for five years. The original P&I payment on your 30-year 6% fixed-rate mortgage was $1,498.88. If you were to refinance the balance into a 15-year 2.5% fixed-rate mortgage, your P&I payment would increase to $1.551.19, but it would be paid off 10 years sooner.
Keep in mind that you can expect a mortgage refinance to usually cost around 3% to 6% of the loan amount. For this reason, weigh the pros and cons of a mortgage refinance before taking the plunge. If the costs outweigh the benefits, you’re better off keeping your existing mortgage. For example, if you’re only going to keep the home for another year, you might not be able to recoup the refinancing costs, and a mortgage refinance may not make financial sense.
What Is a Good Mortgage Rate?
What’s considered a good mortgage rate varies by loan type as well as what’s happening in the economy (e.g., demand for treasury bills, amount of inflation, level of unemployment). For instance, a good mortgage rate as of February 2021 is generally a fixed rate of 2.5% or less for a 15-year mortgage and 3% or less for a 30-year mortgage. However, interest rates change daily, so it’s important to keep an eye on the interest rate environment, especially if you’re shopping for a mortgage.
In addition to the loan type and economic conditions, a good mortgage rate can also vary based on your credit score and the size of the down payment you’re able to make.
For example, as of February 2021, the average rate on a 30-year fixed-rate mortgage with a down payment of less than 20% for borrowers with a FICO score better than 740 was 2.772%, compared to 3.087% with a FICO score less than 680. The average 30-year fixed-rate for those able to make a down payment of 20% or more was 2.785% for FICO scores better than 740 and 3.169% for FICO scores less than 680. These are all considered good mortgage rates.
Why Do Different Mortgage Types Have Different Rates?
Each type of mortgage has a different rate because they have varying levels of risk. One of the primary sources of income for lenders is the money they earn from the interest you pay on your mortgage. For this reason, lenders consider the amount of risk associated with each loan when they set the interest rate. This is referred to as “risk-based pricing” and is premised on the idea that riskier loans like 30-year mortgages should carry a higher rate.
One of the reasons for this is that it’s easier to predict what will happen in the economy in the short-term than it is in the long-term. Similarly, there’s more risk that something will happen to negatively affect your ability to repay the loan, for instance, if you lose your job or there’s an economic downturn.
Are Interest Rate and APR the Same?
Interest rate and APR (annual percentage rate) are not the same. An annual interest rate represents how much it costs to borrow money each year, exclusive of any fees you might have to pay for the loan. It’s important to factor in fees (e.g., discounts points, origination fees, private mortgage insurance) in the borrowing costs, which is why APR exists. This is because APR factors in both the interest rate and fees to determine the annual borrowing cost of a loan.
The difference between interest rate and APR for two mortgage scenarios is shown below:
|Mortgage #1||Mortgage #2|
|Repayment Term||30 years||30 years|
|Other Closing Costs||$2,500||$2,500|
The interest rate and terms of the two mortgages in the sample are identical except the total fees for the first mortgage are $5,500 compared to the total fees of $8,500 for the second loan. For this reason, although both mortgages have an interest rate of 3%, the APR for the first mortgage is 3.14% (lower total fees) and the APR for the second mortgage (higher total fees) is 3.22%. This is why it’s important to consider both the interest rate and fees when making a decision.
How Do I Qualify for Better Mortgage Rates?
Some of the things you can do to qualify for better mortgage rates are to:
- Pay discount points. If you want to get a better mortgage rate, one of the easiest things you can do is to purchase discount points, which you can use to “buy down” your interest rate. Each point typically costs 1% of the loan amount and will usually reduce your rate by 0.25%, although this may vary by lender. For example, one point on a $250,000 mortgage would cost $2,500. If your rate were reduced from 3% to 2.75%, you would save $3,030.59 in interest during the first five years and $12,026.57 over the life of the loan.
- Improve your credit score. Borrowers with better credit scores are considered to have lower risk so lenders can offer them a better interest rate. For this reason, one of the best things you can do to qualify for a better mortgage rate is to improve your credit score. Using a $300,000 loan as an example, someone with an exceptional FICO score of 760 to 850 might be able to receive a 2.555% APR on a 30-year fixed-rate loan compared to an APR of 4.144% for someone with a fair FICO score of 620 to 639.
- Make a larger down payment. Since there’s a higher risk of delinquency and default on mortgages with lower down payments, they usually carry a higher interest rate. That said, one of the things you can do to qualify for a better mortgage rate is to make a larger down payment. To put this in perspective, the average 30-year fixed-rate in February 2021 for someone with a FICO score of 680 to 699 with at least a 20% down payment was 2.956%, compared to a rate of 2.995% with a smaller down payment.
How Big of a Mortgage Can I Afford?
How much mortgage you can afford varies from person to person. If you want to figure out how big of a mortgage you can afford, you can start by looking at your budget. The rule of thumb used by many financial advisors is that you shouldn’t spend more than 28% of your gross monthly income on housing costs and 36% of your gross monthly income on all debt. These are referred to as debt-to-income ratios and are also used by lenders to qualify you.
Housing costs include P&I plus things like private mortgage insurance (PMI), home insurance, real estate taxes, and even homeowners’ association (HOA) fees, which can sometimes be rolled into your total mortgage payment. When figuring out how much of a mortgage you can afford, make sure to include all of these housing costs in your analysis. You may want to use a mortgage calculator to help figure out the monthly payment inclusive of these costs.
Keep in mind, although most lenders don’t want total DTIs to exceed 36% to 43%, you may be able to qualify for a mortgage with a DTI as high as 50%. However, just because you can qualify for a mortgage doesn’t mean you can afford it. Carefully consider the total mortgage payment in relation to your other monthly expenses before moving forward. If it’s not going to be easy to make the payment over the long-term, you may want to consider getting a smaller mortgage.
Do Points Affect Mortgage Interest Rates?
If you want to get a lower mortgage interest rate, one of the things you can do is to buy discount points. Origination fees (points) are costs the borrower pays to cover the costs the lender incurs to make the mortgage, such as processing the application and paying the loan officer. Discount points are fees the borrower pays to “buy down” the interest rate on their mortgage.
You’ll typically pay 1% of the loan amount for each point and will usually receive a 0.25% reduction in your rate (the exact amount may vary by lender). So, one point on a $300,000 loan would cost $3,000 and reduce your rate by 0.25%.
Even though the overall borrowing costs are less, it’s still important to factor in both the mortgage rate and total points (fees) you’ll pay when making a decision. This is because higher fees potentially translate into higher upfront costs. You’ll need to make sure you have enough cash on hand to meet the down payment requirements plus any closing costs.
If you end up running short of cash, you may need to borrow more money, which will increase your overall borrowing costs (e.g., you’ll pay more interest on a larger loan balance, your rate might be higher if you make a lower down payment, etc.). So, think about both rates and fees.
Keep this in mind as well: If you don’t plan to keep your house for a long time, you might not recoup the costs of the discount points you purchase. In our example, one discount point on a $300,000 loan would cost $3,000. Let’s say this lowers your 30-year fixed rate from 3% to 2.75%. If you keep the loan for five years, you’ll save $3,636.72 in interest. However, if you only plan to keep the loan for two years, your savings of $1,483.75 in interest wouldn’t be sufficient to recoup the cost of the discount points.
Does My Down Payment Affect My Interest Rate?
Although various factors will affect the interest rate you’re able to get on a mortgage, your down payment and credit score are two of the most important. Typically, the larger the down payment you’re able to make, the lower the interest rate you’ll be able to get. Similarly, people with better credit scores can get lower rates than people with worse credit scores for a comparable loan.
Loans with smaller down payments are often considered riskier than loans with larger down payments as they often have a higher risk of delinquency and default. Lenders may offset some of the risks of a smaller down payment if there are sufficient compensating factors. A couple of examples of compensating factors associated with low down payments (e.g., less than 20%) are good credit scores and low debt-to-income ratios.
Even with mitigating factors, the interest rate will usually be higher on a mortgage with a smaller down payment than on a comparable mortgage with a larger down payment.
The national rates cited above were calculated by averaging the lowest rates offered by more than 200 of the country's top lenders in each of the 50 U.S. states and Washington, D.C., assuming a loan-to-value ratio (LTV) of 80% and an applicant with a FICO credit score in the 700-760 range. The resulting rates are representative of what customers should expect to see when receiving actual quotes from lenders based on their qualifications, which may vary from the rates lenders advertise.
For our map of the best state rates, the lowest rate currently offered by a surveyed lender in that state is listed, assuming the same parameters of an 80% LTV and a credit score between 700-760.
These mortgage rates are for informational purposes only. Rates may change daily and are subject to change without notice. Loans above a certain threshold may have different loan terms, and products used in our calculations may not be available in all states. Loan rates used do not include amounts for taxes or insurance premiums. Individual lender’s terms will apply.