Mortgage rates declined significantly over the past week, marking the eighth straight week of falling interest rates.
The 30-year fixed mortgage rate is 6.61% for the week ending December 28, 2023, according to data from Freddie Mac. This represents a decrease of -0.06% from a week ago.
The 15-year fixed rate mortgage stands at 5.93%. That’s 0.02% lower than a week prior. At that rate, you’ll pay $840 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Why shop around for mortgage rates?
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
What impacts mortgage rates
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
Federal Reserve policy: When the Fed raises its benchmark federal funds rate, it often leads to higher borrowing costs across the economy, including mortgage rates. The Fed began aggressively hiking rates in 2022 to combat high inflation, causing mortgage rates to soar. Further Fed rate hikes are expected through 2023.
Economic growth and inflation: Strong economic growth and rising inflation generally lead to higher mortgage rates, while slower growth and disinflation place downward pressure on rates.
Geopolitical events: Global conflict or political turmoil often spur investors to move money into safe haven assets like Treasury bonds, lowering yields and mortgage rates.
Investor demand: Strong demand for mortgage-backed securities from investors leads to lower mortgage rates. When demand falls, rates tend to rise.
Employment trends: A strong job market can fuel economic growth and push rates higher. Conversely, weak hiring data or increased unemployment tend to cause lower yields and rates.
Housing market trends: When housing demand is high, rates tend to rise as lenders face increased demand for mortgages. But lower demand for homes often correlates with declining mortgage rates.
Tips for finding the lowest mortgage rate
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Check rates from multiple lenders: Rates vary by lender, so comparing quotes from several lenders ensures you don’t overpay. Online rate comparison sites can give you a quick overview of prevailing rates.
Improve your credit score: Work on raising your credit score to at least 740, which will qualify you for the best mortgage terms. Pay down debts, correct any errors on your credit reports, and avoid taking on new debt before applying for a mortgage.
Lower your debt-to-income ratio: Lenders look closely at your existing debts in relation to your income. Paying down credit cards and other debts before applying for a mortgage can help lower your DTI and qualify for better rates.
Make a sizable down payment: Down payments of 20% or more of the home’s purchase price result in the best mortgage rates and eliminate the need to pay private mortgage insurance.
Compare quotes for 15-year and 30-year terms: In general, 15-year mortgage rates are lower than those on 30-year mortgages. But the higher monthly payment on a 15-year loan may not fit your budget.
Lock in your rate: Rates fluctuate daily. Once you find the rate you want, lock it in by completing most of the mortgage application paperwork. This protects you if rates rise further before closing.
Minimum requirements for common mortgage types
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates over the past three years
Mortgage rates have seen significant fluctuations over the past few years:
2020: Historic lows due to the COVID-19 pandemic. The average 30-year fixed rate mortgage fell below 3% by the end of 2020.
2021: Rates remained very low early in 2021, then began to rise in the spring. By December 2021, rates returned to pre-pandemic levels around 3.5%.
2022: The Fed’s rate hikes and inflation drove mortgage rates dramatically higher throughout 2022. Rates soared above 7% in late 2022 from around 3% at the beginning of the year.
2023: Rates are projected to remain elevated in 2023 compared to the past decade. Further Fed rate hikes could push averages above 8%.
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Methodology
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Editor’s note: In June 2014, the Consumer Financial Protection Bureau (CFPB) took enforcement action against Truist for unlawful and deceptive practices. Truist was ordered to pay at least $500 million to underwater borrowers, provide $40 million to victims of foreclosure, pay a penalty to the Department of Justice and establish homeowner protections to prevent further violations. Because of this, we can’t currently recommend Truist as a lender.
Truist offers several options for mortgage purchase and refinance loans, including doctor loans for qualified physicians and dentists. If you’re thinking about applying for a mortgage from Truist, here’s what you should know first.
Truist
Blueprint Rating
Truist overview
Truist has roots that date back to 1872, when the Branch Banking and Trust Company (BB&T) was founded. In 2019, BB&T merged with SunTrust Banks to form the Truist Financial Corporation.
Unfortunately, in its short time as Truist, the company has garnered thousands of poor reviews from customers. The company is accredited with the Better Business Bureau (BBB) and has an A+ BBB rating. However, as of Dec. 12, 2023, the company has a BBB star rating of just 1.09 out of 5.0, based on over 2,300 customer reviews. Customers complained about having trouble contacting customer service and others complained about fraudulent activities within their account. Truist seems to send an automated reply to these reviews, telling them to contact the company directly.
As of Dec. 12, 2023, Truist has also earned a star rating of 1.2 out of 5.0 stars on Trustpilot, based on 1,300 reviews.
How to qualify for a Truist mortgage
Truist offers a variety of mortgage loans, each with its own requirements. Here’s how to put yourself in the best standing to qualify for a Truist mortgage.
How to apply for a Truist mortgage
Compare lenders and get pre-qualified. Before you apply, be sure to compare as many mortgage lenders as possible, including Truist, to find the right loan for your needs. Consider interest rates, repayment terms, eligibility requirements and other factors as you weigh your choices. Truist as well as many other lenders allow you to pre-qualify with only a soft credit check that won’t affect your credit score — this will give you an idea of how much you can borrow and help you set a budget.
Pick a lender and apply. If you choose to go forward with Truist, you can start the formal application process online, by phone or in person at a local Truist branch. Speak with a loan officer to complete the application and determine the right type of mortgage for you. Be prepared to provide required documents, such as proof of income, assets, identification and previous tax statements. Work with the bank to answer any questions and document requests in a timely manner to avoid delays.
Close on the loan. The loan approval process with Truist typically takes about 30 to 60 days. If you’re approved, your loan will be scheduled to close. On closing day, you’ll sign paperwork and pay the closing costs, after which you’ll get the key to your new home.
Pros of a Truist mortgage
Offers doctor loans to medical and dental professionals.
Offers construction-to-permanent loans.
Can apply online, over the phone or in person in some areas.
Cons of a Truist mortgage
Doesn’t offer mortgages backed by the U.S. Department of Agriculture (USDA).
Poor customer service reviews.
Only available in 15 states and Washington, D.C.
Truist perks and special features
Savings and discounts
Like many other lenders, Truist offers you the option to buy mortgage points. These will permanently lower the interest rate on your loan for an upfront fee. If you intend to stay in the home for the length of the loan, mortgage points can save you thousands of dollars on interest payments.
Offers doctor loans
If you’re a medical doctor or dentist, a doctor loan could be a good option. These loans aren’t offered by many lenders. But with Truist’s doctor loan, qualified physicians and dentists can get a more favorable interest rate and make a lower or no down payment, even if they have student loans.
Offers construction-to-permanent loans
Another loan type that Truist offers that a lot of other mortgage lenders don’t is a construction-to-permanent loan. If you’re building a home, you can get one loan that funds the construction. Once the construction is complete, this loan will roll over into a traditional mortgage.
With Truist’s construction-to-permanent loan, you’ll make interest-only payments during construction and have only one set of closing costs for the land, construction and mortgage. Plus, there are no penalties for prepayment, so you don’t have to worry about being charged if you pay the mortgage off early.
Multiple ways to apply
Truist offers you the ability to apply over the phone, online or in person. With so many people turning to online mortgage applications, the fact that Truist offers physical locations can be an asset if you prefer to apply for a mortgage in person. Buying a home is a big decision and having someone to talk to face-to-face can be helpful.
How Truist could improve
Offer USDA loans
For much of rural America, a USDA loan increases their ability to own a home. These government-backed loans are for low-income families buying a home in specific rural areas. Truist, however, doesn’t offer these loans, which limits options for those who don’t live in cities. If Truist wants to improve its offerings, one way could be to provide a USDA loan option.
Improve customer service
Just browsing sites like BBB and Trustpilot can leave you with the impression that Truist isn’t well-regarded. There are a lot of negative reviews, complaining about a variety of things. These include the bank’s slowness in responding to deposits, improper handling of accounts and multiple accounts being hacked. Customers complain that they often are required to visit branches in person to resolve these issues, which is a problem when there are limited hours.
Expand availability
Truist is only available in 15 states and Washington, D.C. Its locations are mostly in the South and eastern parts of the country. Truist’s mortgages could reach more people if it expanded its availability to additional areas.
While Truist’s roots lie in operating as a traditional brick-and-mortar bank, it could make its mortgages available to a wider part of the country while maintaining its current in-person branches.
Truist customer service and reviews
There are multiple ways to contact Truist. You can visit a branch in person, connect on social media or call. You can talk to someone Monday through Friday, 8 a.m. to 8 p.m. Eastern Time (ET) and 8 a.m. to 5 p.m. ET on Saturdays. After hours, there’s 24-hour automated assistance.
The company also offers a mobile app, which lets you view your accounts, make payments and more. The app has a rating of 4.7 out of 5.0 stars on both the App Store and the Google Play store as of Dec. 12, 2023. However, many recent reviews note that the app has suffered since the merger to form Truist, with customers citing that recent versions are slow and unstable.
Customer reviews
Truist has received many negative reviews from customers on sites like BBB and Trustpilot. Some trends among these reviews state that the company is difficult to contact, accounts are often locked and promotions the company runs are misleading.
As of Dec. 12, 2023, these reviews have resulted in a BBB customer rating of 1.09 out of 5.0 stars and a Trustpilot rating of 1.2 out of 5.0 stars.
CFPB action
In 2014, SunTrust (a predecessor of Truist), was required by the CFPB to pay customers $540 million due to wrongfully servicing their loans. The company was also required to pay a penalty of $418 million to the Department of Justice. These institutions found that SunTrust was illegally foreclosing on homes by denying loan modifications, deceiving homeowners and charging unauthorized fees.
Truist alternatives: Truist vs. Bank of America vs. Chase
It’s important to consider a wide variety of mortgage lenders before applying for a loan. Two competitors to consider in addition to Truist include Bank of America and Chase.
Bank of America is a multinational financial company with ties back to 1784, when its predecessor, the Massachusetts Bank, was founded. As of 2021, it holds over $3.17 trillion in total assets and operates worldwide.
Chase Bank is a subsidiary of the holding company JPMorgan Chase & Co. Its history dates back to 1799 when its predecessor was founded as The Manhattan Company. As of 2021, JPMorgan Chase & Co. held over $3.7 trillion in total assets, making it the largest financial institution in the country.
While Truist is a big bank with a lot of history, both Bank of America and Chase are much larger than Truist. Mortgages are small parts of their businesses. With either of these banks, you might have more financing options. However, with a place like Truist, you could have a more personalized experience. While Truist is only available in 15 states and Washington D.C., that can be a positive as chances are higher that a Truist loan officer would be more familiar with state laws and assistance programs.
Frequently asked questions (FAQs)
The exact credit score you’ll need to get a Truist mortgage depends on the type of loan you choose. You must have a minimum credit score of 620 to qualify for FHA, VA and conventional mortgages. For jumbo loans, you’ll need a score of at least 680.
Truist mortgages are available in 15 states plus Washington, D.C. These states include:
Alabama
Florida
Georgia
Indiana
Kentucky
Maryland
New Jersey
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Texas
Virginia
West Virginia
Single-family homes, condominiums and some multi-unit properties are all eligible properties for personal mortgages. Truist also offers loans for real estate investors.
Truist is one of the 10 largest banks in the U.S. You don’t get that without repeat customers. Still, the recent merger of BB&T and SunTrust has caused hiccups with client accounts. Also, in 2014, SunTrust the CFPB required SunTrust to pay customers $540 million in relief due to wrongfully servicing their loans.
For a third day, average mortgage rates barely moved yesterday. But that’s good because it means last week’s big falls remain effectively uneroded.
First thing, it was again looking as if mortgage rates today might fall, perhaps modestly or moderately. However, that could change as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.125%
7.14%
-0.075
Conventional 15-year fixed
6.385%
6.415%
-0.1
Conventional 20-year fixed
6.975%
7%
-0.045
Conventional 10-year fixed
6.12%
6.145%
-0.065
30-year fixed FHA
5.98%
6.88%
-0.095
30-year fixed VA
6.165%
6.315%
-0.13
5/1 ARM Conventional
6.425%
7.675%
-0.035
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
Every day that passes makes a corrective bounce (when mortgage rates rise as markets think they’ve got carried away) less likely. And it reinforces my hope that those rates are in a downward trend that could last well into next year.
So, my personal rate lock recommendations are:
LOCK if closing in 7 days
FLOAT if closing in 15 days
FLOAT if closing in 30 days
FLOAT if closing in 45 days
FLOATif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged lower to 3.90% from 3.92%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mostly falling this morning. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices climbed to $75.14 from $73.12 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices held steady at $2,049 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — ticked down to 77 from 78. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to decrease. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
The Federal Reserve
This morning’s Wall Street Journal (paywall) observed: “After their policy meeting last week, Fed officials released projections of at least three rate cuts [in general interest rates] next year. They have since been flummoxed that investors expect even faster and deeper cuts. The result: Confusion over when and how quickly the Fed might cut as the central bank tries to bring inflation down without a painful recession.”
This could turn into a real issue that could push mortgage rates higher, probably in the new year. Wall Street has a long and inglorious record of hearing what it wants the Fed to say rather than what the Fed actually says. And we’ve seen quite recently examples of sharp rises in mortgage rates when markets’ wishful thinking collides with reality.
Still, last week’s Fed meeting did deliver genuinely good news. And, even if mortgage rates rise when investors face the cold light of dawning reality, I’m optimistic that we’ll keep at least most of the recent gains. Just be aware that the path to lower mortgage rates is unlikely to be smooth.
Today
This morning’s economic reports cover existing home sales in November and consumer confidence in December. They’re both published too late for me to assess their likely impact on markets and mortgage rates.
They could push mortgage rates a little higher or lower, but they rarely move them far or for long.
Tomorrow
Tomorrow brings gross domestic product (GDP) figures for the third quarter of this year. This will be the third and final estimate for this number.
The second estimate put GDP growth at 5.2%, up from 2.1% in the second quarter. MarketWatch says that market expectations for tomorrow’s figure have recently been slightly scaled down to 5.1%.
If the actual number tomorrow is lower than 5.1%, that could drag mortgage rates lower. But, if it’s higher, that could push those rates upward.
Friday
We’re due November’s personal consumption expenditures (PCE) price index on Friday. Markets might get nervous if that shows inflation rising more than expected because that could destroy the Fed’s new-found optimism.
More on what to expect from the PCE report tomorrow.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Dec. 14 report put that same weekly average at 6.95%, down from the previous week’s 7.03%. Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q4/23) and the following three quarters (Q1/24, Q2/24 and Q3/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Dec. 19 and the MBA’s on Dec. 13.
Forecaster
Q4/23
Q1/24
Q2/24
Q3/24
Fannie Mae
7.4%
7.0%
6.8%
6.6%
MBA
7.4%
7.0%
6.6%
6.3%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Mortgage interest rates are mixed over the past week, with the 30-year fixed rate declining for the seventh straight week and the 15-year fixed rate rising marginally.
The 30-year fixed mortgage rate is 6.95% for the week ending December 14, 2023, according to data from Freddie Mac. This represents a decrease of -0.08% from a week ago.
The 15-year fixed rate mortgage stands at 6.38%. That’s 0.09% higher than a week prior. At that rate, you’ll pay $865 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Why shop around for mortgage rates?
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
What impacts mortgage rates
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
Federal Reserve policy: When the Fed raises its benchmark federal funds rate, it often leads to higher borrowing costs across the economy, including mortgage rates. The Fed began aggressively hiking rates in 2022 to combat high inflation, causing mortgage rates to soar. Further Fed rate hikes are expected through 2023.
Economic growth and inflation: Strong economic growth and rising inflation generally lead to higher mortgage rates, while slower growth and disinflation place downward pressure on rates.
Geopolitical events: Global conflict or political turmoil often spur investors to move money into safe haven assets like Treasury bonds, lowering yields and mortgage rates.
Investor demand: Strong demand for mortgage-backed securities from investors leads to lower mortgage rates. When demand falls, rates tend to rise.
Employment trends: A strong job market can fuel economic growth and push rates higher. Conversely, weak hiring data or increased unemployment tend to cause lower yields and rates.
Housing market trends: When housing demand is high, rates tend to rise as lenders face increased demand for mortgages. But lower demand for homes often correlates with declining mortgage rates.
Tips for finding the lowest mortgage rate
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Check rates from multiple lenders: Rates vary by lender, so comparing quotes from several lenders ensures you don’t overpay. Online rate comparison sites can give you a quick overview of prevailing rates.
Improve your credit score: Work on raising your credit score to at least 740, which will qualify you for the best mortgage terms. Pay down debts, correct any errors on your credit reports, and avoid taking on new debt before applying for a mortgage.
Lower your debt-to-income ratio: Lenders look closely at your existing debts in relation to your income. Paying down credit cards and other debts before applying for a mortgage can help lower your DTI and qualify for better rates.
Make a sizable down payment: Down payments of 20% or more of the home’s purchase price result in the best mortgage rates and eliminate the need to pay private mortgage insurance.
Compare quotes for 15-year and 30-year terms: In general, 15-year mortgage rates are lower than those on 30-year mortgages. But the higher monthly payment on a 15-year loan may not fit your budget.
Lock in your rate: Rates fluctuate daily. Once you find the rate you want, lock it in by completing most of the mortgage application paperwork. This protects you if rates rise further before closing.
Minimum requirements for common mortgage types
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates over the past three years
Mortgage rates have seen significant fluctuations over the past few years:
2020: Historic lows due to the COVID-19 pandemic. The average 30-year fixed rate mortgage fell below 3% by the end of 2020.
2021: Rates remained very low early in 2021, then began to rise in the spring. By December 2021, rates returned to pre-pandemic levels around 3.5%.
2022: The Fed’s rate hikes and inflation drove mortgage rates dramatically higher throughout 2022. Rates soared above 7% in late 2022 from around 3% at the beginning of the year.
2023: Rates are projected to remain elevated in 2023 compared to the past decade. Further Fed rate hikes could push averages above 8%.
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Methodology
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Mortgage interest rates are down over the past week, marking the sixth straight week of rates decreasing. This decline is promising for prospective homebuyers, though interest rates lowering more will depend on Federal Reserve decisions and other economic factors.
The 30-year fixed mortgage rate is 7.03% for the week ending December 7, 2023, according to data from Freddie Mac. This represents a decrease of -0.19% from a week ago.
The 15-year fixed rate mortgage stands at 6.29%. That’s -0.27% lower than a week prior. At that rate, you’ll pay $860 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Why shop around for mortgage rates?
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
What impacts mortgage rates
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
Federal Reserve policy: When the Fed raises its benchmark federal funds rate, it often leads to higher borrowing costs across the economy, including mortgage rates. The Fed began aggressively hiking rates in 2022 to combat high inflation, causing mortgage rates to soar. Further Fed rate hikes are expected through 2023.
Economic growth and inflation: Strong economic growth and rising inflation generally lead to higher mortgage rates, while slower growth and disinflation place downward pressure on rates.
Geopolitical events: Global conflict or political turmoil often spur investors to move money into safe haven assets like Treasury bonds, lowering yields and mortgage rates.
Investor demand: Strong demand for mortgage-backed securities from investors leads to lower mortgage rates. When demand falls, rates tend to rise.
Employment trends: A strong job market can fuel economic growth and push rates higher. Conversely, weak hiring data or increased unemployment tend to cause lower yields and rates.
Housing market trends: When housing demand is high, rates tend to rise as lenders face increased demand for mortgages. But lower demand for homes often correlates with declining mortgage rates.
Tips for finding the lowest mortgage rate
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Check rates from multiple lenders: Rates vary by lender, so comparing quotes from several lenders ensures you don’t overpay. Online rate comparison sites can give you a quick overview of prevailing rates.
Improve your credit score: Work on raising your credit score to at least 740, which will qualify you for the best mortgage terms. Pay down debts, correct any errors on your credit reports, and avoid taking on new debt before applying for a mortgage.
Lower your debt-to-income ratio: Lenders look closely at your existing debts in relation to your income. Paying down credit cards and other debts before applying for a mortgage can help lower your DTI and qualify for better rates.
Make a sizable down payment: Down payments of 20% or more of the home’s purchase price result in the best mortgage rates and eliminate the need to pay private mortgage insurance.
Compare quotes for 15-year and 30-year terms: In general, 15-year mortgage rates are lower than those on 30-year mortgages. But the higher monthly payment on a 15-year loan may not fit your budget.
Lock in your rate: Rates fluctuate daily. Once you find the rate you want, lock it in by completing most of the mortgage application paperwork. This protects you if rates rise further before closing.
Minimum requirements for common mortgage types
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates over the past three years
Mortgage rates have seen significant fluctuations over the past few years:
2020: Historic lows due to the COVID-19 pandemic. The average 30-year fixed rate mortgage fell below 3% by the end of 2020.
2021: Rates remained very low early in 2021, then began to rise in the spring. By December 2021, rates returned to pre-pandemic levels around 3.5%.
2022: The Fed’s rate hikes and inflation drove mortgage rates dramatically higher throughout 2022. Rates soared above 7% in late 2022 from around 3% at the beginning of the year.
2023: Rates are projected to remain elevated in 2023 compared to the past decade. Further Fed rate hikes could push averages above 8%.
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Methodology
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Mortgage interest rates are down over the past week, marking the sixth straight week of rates decreasing. This decline is promising for prospective homebuyers, though interest rates lowering more will depend on Federal Reserve decisions and other economic factors.
The 30-year fixed mortgage rate is 7.03% for the week ending December 7, 2023, according to data from Freddie Mac. This represents a decrease of -0.19% from a week ago.
The 15-year fixed rate mortgage stands at 6.29%. That’s -0.27% lower than a week prior. At that rate, you’ll pay $860 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Why shop around for mortgage rates?
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
What impacts mortgage rates
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
Federal Reserve policy: When the Fed raises its benchmark federal funds rate, it often leads to higher borrowing costs across the economy, including mortgage rates. The Fed began aggressively hiking rates in 2022 to combat high inflation, causing mortgage rates to soar. Further Fed rate hikes are expected through 2023.
Economic growth and inflation: Strong economic growth and rising inflation generally lead to higher mortgage rates, while slower growth and disinflation place downward pressure on rates.
Geopolitical events: Global conflict or political turmoil often spur investors to move money into safe haven assets like Treasury bonds, lowering yields and mortgage rates.
Investor demand: Strong demand for mortgage-backed securities from investors leads to lower mortgage rates. When demand falls, rates tend to rise.
Employment trends: A strong job market can fuel economic growth and push rates higher. Conversely, weak hiring data or increased unemployment tend to cause lower yields and rates.
Housing market trends: When housing demand is high, rates tend to rise as lenders face increased demand for mortgages. But lower demand for homes often correlates with declining mortgage rates.
Tips for finding the lowest mortgage rate
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Check rates from multiple lenders: Rates vary by lender, so comparing quotes from several lenders ensures you don’t overpay. Online rate comparison sites can give you a quick overview of prevailing rates.
Improve your credit score: Work on raising your credit score to at least 740, which will qualify you for the best mortgage terms. Pay down debts, correct any errors on your credit reports, and avoid taking on new debt before applying for a mortgage.
Lower your debt-to-income ratio: Lenders look closely at your existing debts in relation to your income. Paying down credit cards and other debts before applying for a mortgage can help lower your DTI and qualify for better rates.
Make a sizable down payment: Down payments of 20% or more of the home’s purchase price result in the best mortgage rates and eliminate the need to pay private mortgage insurance.
Compare quotes for 15-year and 30-year terms: In general, 15-year mortgage rates are lower than those on 30-year mortgages. But the higher monthly payment on a 15-year loan may not fit your budget.
Lock in your rate: Rates fluctuate daily. Once you find the rate you want, lock it in by completing most of the mortgage application paperwork. This protects you if rates rise further before closing.
Minimum requirements for common mortgage types
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates over the past three years
Mortgage rates have seen significant fluctuations over the past few years:
2020: Historic lows due to the COVID-19 pandemic. The average 30-year fixed rate mortgage fell below 3% by the end of 2020.
2021: Rates remained very low early in 2021, then began to rise in the spring. By December 2021, rates returned to pre-pandemic levels around 3.5%.
2022: The Fed’s rate hikes and inflation drove mortgage rates dramatically higher throughout 2022. Rates soared above 7% in late 2022 from around 3% at the beginning of the year.
2023: Rates are projected to remain elevated in 2023 compared to the past decade. Further Fed rate hikes could push averages above 8%.
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Methodology
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Many people want to buy a home but think it isn’t possible because they don’t have money to put toward a down payment. Traditionally, lenders require a 20% down payment toward your mortgage.
But a 20% down payment adds up to a lot of money. For example, if you plan to purchase a $150,000 home, you’d need to come up with a $30,000 down payment. Many people cannot afford this, but fortunately, the 20% rule is a lot less common than you might think.
Is a buying a house with no money down possible?
The National Association of Realtors (NAR) reports that 39% of non-owners believe they need a 20% down payment or more and 22% believe they need a 10% to 14% down payment.
But neither of these are true. Many mortgage lenders will let you buy a home by putting down as little as 3%. And some lenders will let you skip the down payment altogether.
NAR also found that 61% of first-time homebuyers made a down payment between zero and 6%. So, it’s safe to say that a 20% down payment isn’t the standard anymore. But unfortunately, many consumers choose not to pursue homeownership because they believe this down payment myth.
Weighing the Pros and Cons of No Down Payment Mortgages
Is there any reason to aim for 20% down when most home buyers buy with a down payment less than 20%? If you can afford it, yes, the 20% rule is still a wise choice.
The more money you put toward your mortgage, the less debt you’ll have to repay and the less your monthly payment will be. Plus, there are several drawbacks to putting down less than 20%:
Less favorable rates: If you pay less than 20%, lenders will probably see you as a risky investment. And they will take this into consideration when calculating your mortgage rates. In general, you can expect to pay a higher interest rate if you put down a smaller down payment.
Higher closing costs: Closing costs are based on the size of your mortgage. So, the smaller your down payment is, the higher your closing costs will be. However, you may be able to get around this if you live in a state where it’s typical for the seller to pay the closing costs.
Private mortgage insurance (PMI): Private mortgage insurance is a type of mortgage insurance designed for borrowers who make a down payment lower than 20%. It protects your mortgage lender in case you end up defaulting on your loan.
PMI can cost as much as 1% of your total monthly mortgage payment. So for a $150,000 mortgage, you’ll end up paying $150 per month.
However, this may not be that bad, especially if you have a less expensive mortgage. And once you reach 20% home equity, you can cancel your PMI and get rid of these extra payments.
Check Out Our Top Picks for 2023:
Best Mortgage Lenders
How to Buy a House With No Money Down
Fortunately, there are several lending programs that do not require a down payment. Here are five payment assistance programs that will help you buy a home with little to no down payment.
1. VA Loans
VA loans are a valuable option for eligible military veterans, active-duty service members, and certain surviving spouses. These government-backed loans offer several benefits, making homeownership more accessible and affordable through the use of a VA loan.
100% Financing and No Down Payment
One of the most significant advantages of VA loans is the 100% financing, meaning you won’t need to make a down payment when utilizing a VA loan. This can save borrowers a substantial amount of money upfront, making it easier to enter the housing market.
No Private Mortgage Insurance (PMI) Requirement
Unlike conventional loans that require PMI for down payments less than 20%, VA loans do not require PMI. This can save borrowers hundreds or even thousands of dollars per year in mortgage insurance premiums when using a VA loan.
VA Funding Fee
While VA loans offer numerous benefits, there is a one-time funding fee charged to help offset the costs of the program. The funding fee is 2.15% of the total loan amount for first-time users of VA loans and 3.3% for subsequent uses.
This fee can be financed into the VA loan, reducing the out-of-pocket expenses for the borrower. In some cases, borrowers may be exempt from the funding fee, such as those with service-connected disabilities.
Certificate of Eligibility
To apply for a VA loan, borrowers need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. The COE verifies the borrower’s eligibility for the VA loan program based on their military service or, in some cases, the service of their spouse. The COE can be requested online through the Department of Veterans Affairs website, by mail, or through an approved lender.
Additional Benefits
VA loans also offer competitive interest rates, more lenient credit requirements, and flexible underwriting guidelines compared to conventional loans. Additionally, there are no prepayment penalties, allowing borrowers to pay off their VA loans early without incurring additional fees.
2. Navy Federal Credit Union
Navy Federal Credit Union’s loan program is similar to what the VA offers. It offers a zero down mortgage and no mortgage insurance. And Navy Federal’s funding fee is only 1.75%.
Navy Federal offers a 30-year loan and a 30-year jumbo loan. 30-year loans have a loan limit of $424,100 while jumbo loans are available up to $1 million. However, you will have to be a Navy Federal member to qualify.
3. USDA Loans
If you’re looking to move to a rural area, you might qualify for a USDA loan. The United States Department of Agriculture Housing Program was designed to aid rural development and is aimed at low-income families. USDA loans offer 100% financing with low interest rates.
Here are the eligibility requirements you must meet to qualify for a USDA loan:
When buying a home it must be within the USDA’s boundaries: Although this loan targets rural areas, some suburban areas may still qualify. You can look at this map on the U.S. Department of Agriculture’s website to see if your location falls within the USDA’s geographical boundaries.
Your household income can’t exceed a certain threshold: This applies to everyone living in the household, even if they won’t be listed on the mortgage. For instance, if you have a parent living with you who collects Social Security, this counts toward the gross income of all members of a household. The maximum household income varies by state and county so you can find out if you qualify here.
See also: Best Home Loans for Low-Income Borrowers
4. Lease-Option
A lease-option (also known as rent-to-own) allows you to rent a home with the option to buy it at a predetermined price after a certain period. A portion of your monthly rent may be applied toward the purchase price or down payment. This can be a solid option if you need more time to save for a down payment or improve your credit.
5. Seller Financing
In some cases, the seller may be willing to finance the property for you, allowing you to purchase the home without a traditional mortgage. This arrangement typically requires a contract outlining the terms of the loan, including the interest rate, payment schedule, and any potential penalties.
Seller financing can be a viable option if you have a strong relationship with the seller or if the seller is having difficulty selling the property.
6. Crowdfunding
Crowdfunding is a method where you raise money from multiple individuals, typically through online platforms. You can set up a campaign to raise funds for your down payment or even the entire purchase price. This method may work best if you have a strong network of friends, family, and supporters who are willing to contribute to your home-buying goal.
7. Shared Equity Agreements
Shared equity agreements involve partnering with an investor who provides a portion or all of the down payment in exchange for a percentage of ownership in the property. When the property is sold or refinanced, the investor receives a return on their investment based on the agreed-upon share of equity. This can be an attractive option if you can’t afford a down payment but are willing to share future appreciation in the home’s value.
8. Housing Assistance Programs
There are numerous local, state, and federal housing assistance programs that offer grants, low-interest loans, or other forms of financial support to help eligible individuals purchase a home with no money down. These programs often have specific requirements, such as income limits, property location, or first-time homebuyer status. Be sure to research and apply for any programs for which you might be eligible.
Low Down Payment Loans
If you’re unable to buy a house with no money down but can afford a small down payment, consider these low down payment options that can help make homeownership more accessible.
1. 97% LTV mortgages
97% LTV mortgages is a loan program that is offered to first-time homebuyers by Fannie Mae and Freddie Mac. They require a 3% minimum down payment and private mortgage insurance.
Here are the guidelines for the program:
You’ll need a credit score of at least 680
One of the borrowers must be a first-time homeowner
Manufactured housing isn’t permitted
Gifts, grants, and other funds may be used toward the down payment
2. Federal Housing Administration (FHA) Loans
The Federal Housing Administration (FHA) was established in 1934 to reduce the requirements to qualify for a mortgage. This government-backed mortgage program offers flexible requirements, making it an attractive option for first-time homebuyers.
Here are the guidelines you’ll need to meet to qualify for an FHA loan:
Credit Score Requirements
The minimum credit score required to qualify for an FHA loan is 500. The specific down payment requirements depend on your credit score:
If your credit score is between 500 and 579, you’ll need to make a 10% down payment.
If your credit score is 580 or higher, you’ll have to make a 3.5% down payment.
Seller Contributions
FHA loans allow sellers to contribute up to 6% of the closing costs. This can help reduce the upfront costs for the buyer and make it easier to afford the purchase.
Mortgage Insurance Requirements
Mortgage insurance is required for an FHA loan, protecting the lender in case the borrower defaults on the loan. However, once you build 20% equity in the home, you can refinance to a conventional loan to eliminate the mortgage insurance requirement.
Debt-to-Income Ratios
FHA loans accept high debt-to-income (DTI) ratios, allowing borrowers with significant existing debt to still qualify for a mortgage. The FHA typically requires a maximum DTI of 43%, but exceptions can be made for borrowers with compensating factors, such as substantial savings or a history of making large payments on time.
3. HomeReady Mortgage
The HomeReady mortgage is a Fannie Mae program designed for low-to-moderate-income borrowers. It requires a down payment as low as 3% and offers flexible underwriting guidelines, making it an attractive option for first-time homebuyers or those with limited credit history.
4. Home Possible Mortgage
Similar to the HomeReady mortgage, the Home Possible mortgage is a Freddie Mac program that allows for a down payment as low as 3%. It is designed to help low-to-moderate-income borrowers achieve homeownership and offers flexible underwriting guidelines.
5. State and Local Homebuyer Assistance Programs
Many state and local governments offer homebuyer and down payment assistance programs that provide grants or low-interest loans to help cover down payment and closing costs. These programs typically have income and property location requirements, so be sure to research and apply for any programs for which you might be eligible in your area.
Each of these low down payment mortgage options has its own set of eligibility requirements and potential benefits. Be sure to research and compare these options to determine which one best aligns with your financial situation and home-buying goals.
Preparing for Homeownership
Before jumping into the home buying process, it’s essential to prepare yourself financially and mentally. This section covers tips for improving credit scores, creating a budget, and managing debt to make the home buying process smoother.
Credit Score Improvement Tips
Improving your credit score involves checking your credit report for errors and disputing any inaccuracies. Ensure that you pay your bills on time and reduce outstanding debt as much as possible. Keep credit card balances low, avoid opening new credit accounts, and consider requesting a credit limit increase without increasing your spending.
Creating a Budget
Creating a budget requires tracking your income and expenses to understand your spending habits better. Categorize your expenses and set realistic limits for each category. Allocate funds for saving and investing, including a down payment and emergency fund, and regularly review and adjust your budget as needed.
Managing Debt
Managing your debt effectively involves prioritizing high-interest debt and paying more than the minimum payment. Consider debt consolidation or refinancing options to secure a lower interest rate. Avoid taking on new debt before applying for a mortgage and create a debt repayment plan that you can stick to.
Understanding the Total Cost of Homeownership
Understanding the total cost of homeownership means factoring in property taxes, insurance, maintenance, and utility costs. Estimate homeowners association (HOA) fees if applicable and consider the costs of furnishing and updating the home. Prepare for potential increases in expenses over time, such as property tax hikes.
How to Choose the Right Mortgage Option
With various mortgage options available, it’s crucial to select the one that suits your financial needs and long-term goals. This section discusses factors to consider when choosing a mortgage, such as loan term, interest rates, and mortgage insurance.
Fixed-Rate vs. Adjustable-Rate Mortgages
Fixed-rate mortgages have a consistent interest rate for the loan’s duration, providing stability and predictable monthly payments. In contrast, adjustable-rate mortgages (ARMs) have an initial fixed-rate period followed by periodic rate adjustments, which may result in lower initial payments but potential rate increases over time.
Mortgage Term: 15-Year vs. 30-Year
The mortgage term plays a crucial role in determining the overall cost of your mortgage. 15-year mortgages typically have lower interest rates and allow for faster equity buildup, but require higher monthly payments. 30-year mortgages offer lower monthly payments, but result in more interest paid over the loan’s lifetime.
Mortgage Insurance Considerations
PMI may be required for conventional loans with less than a 20% down payment. Loans backed by the federal government, such as FHA, VA, or USDA loans, may have different insurance requirements or fees.
Assessing Your Long-Term Goals
When choosing a mortgage option, consider how long you plan to live in the home and whether your financial situation or housing needs may change. Evaluate the potential for home value appreciation and the impact on your future financial goals.
Planning Your Next Steps
Assess Your Financial Situation
The amount of money you choose to put toward a down payment is a personal choice. If you feel ready for homeownership but know that a 20% down payment isn’t feasible for you, there are many options available to help you.
The best place to start is by looking at your monthly budget and seeing what you can realistically afford. Use a mortgage calculator to reverse engineer your goal and find your ideal home purchase. Consider factors like property taxes, insurance, and maintenance costs, as well as any debts you currently have.
Get Pre-Approved
Get pre-approved for a mortgage before you start house hunting. This will give you an idea of how much you can afford, and it will show sellers and real estate agents that you’re a serious buyer.
To get pre-approved, you’ll need to provide your lender with documentation such as pay stubs, bank statements, and tax returns. They’ll then assess your credit score and financial history to determine how much they’re willing to lend you.
Shop Around for the Best Mortgage
Shop around for the best mortgage rates and terms. Don’t just settle for the first lender you come across. Compare different lenders and loan programs to find the best fit for your financial situation. Look for competitive interest rates, low fees, and flexible repayment terms.
Work with a Knowledgeable Real Estate Agent
A good real estate agent can help you find a home that fits your needs and budget. They’ll also guide you through the home buying process, making it less stressful and ensuring you don’t make any costly mistakes.
Attend First-Time Homebuyer Classes
Consider attending first-time homebuyer classes or workshops. Many local organizations and government agencies offer educational resources for first-time homebuyers. These classes can help you understand the ins and outs of the home buying process and give you the knowledge you need to make informed decisions.
Save for Unexpected Expenses
Even if you’re able to buy a home with no money down, it’s a good idea to have some savings set aside for unexpected expenses. These might include moving costs, home repairs, or furnishing your new home.
Build an Emergency Fund
In addition to saving for unexpected expenses, it’s also important to have an emergency fund in place. This should be enough to cover three to six months’ worth of living expenses in case you lose your job or face another financial emergency.
Be Patient and Stay Disciplined
Home buying is a complex process, and it can take time to find the right home and secure financing. Stay focused on your goals, be disciplined with your spending, and remember that homeownership is a long-term investment.
Conclusion
Buying a home with no money down is possible, but it may not be the best choice for everyone. Consider your financial situation, your long-term goals, and the various mortgage options available to you before deciding on a zero down payment mortgage. With careful planning and preparation, you can make your dream of homeownership a reality, even if you don’t have a large down payment saved up.
Whether you’re a first-time homebuyer or a seasoned homeowner, there’s no denying that purchasing a home is a huge financial decision.
You’ll likely have to make a down payment and commit to a monthly mortgage payment for 30 years (unless you decide to sell before then). Even so, the obligation should not be taken lightly.
Just from preparing to buy a home, you know that your credit score is an incredibly important number. It determines your eligibility for a home loan, and also plays a major role in determining your interest rate.
The higher your credit score is, the lower your interest rate will be, which can really affect your monthly payment. Hopefully, yours is in top shape when it’s time to buy. However, it’s also important to consider what happens to your credit score after you actually purchase your home.
You might be surprised to find out that buying a home has both positive and negative impacts on your credit scores. Read on to find out exactly what to expect of your credit score when you get a mortgage. We’ll also teach you how to minimize any potential damage that could occur.
How Applying for a Mortgage Affects Your Credit Score
It’s smart to shop around for interest rates from different lenders when you’re looking for a mortgage. Interest rates can vary greatly depending on the lending company and the type of mortgage loan they offer you. However, it’s essential to employ the proper strategy when comparing those offers.
That’s because each time you apply for new credit, whether it’s a mortgage, auto loan, or credit card, a credit inquiry appears on your report. Your credit score drops anywhere between five and ten points.
Unfortunately, if you have an excessive number of credit inquiries, mortgage lenders may think you’re desperate for cash and be reluctant to lend to you. The dip in your credit score reflects this potential risk.
The Benefits of Mortgage Pre-Approval on Credit
So, how can you mitigate this issue when shopping for a mortgage? First, limit the number of lenders you apply to. You can also ask for a pre-approval to find out what interest rates you’d be eligible for. The difference is that there is not a hard credit check performed. Instead, the mortgage lender only does a soft pull, which doesn’t have any effect at all.
You’ll still have to go through the formal application (and hard credit pull) once you decide on a mortgage loan. However, the preapproval process gives you the opportunity to compare offers without any type of commitment.
Multiple Credit Inquiries for the Same Type of Loan
Another way to protect your credit scores from too many inquiries is to limit your loan search to two weeks. When evaluating your credit history, credit reporting agencies realize that consumers want to shop around for different rates to get the best loan. So, if you have several of the same types of inquiries listed in a two-week span, they’ll only be counted as a single inquiry.
Mark your calendar with the first date of your loan application so you can track how long your search has lasted. This will help you keep your credit scores intact. Plus, you’ll also keep yourself on schedule for getting your mortgage in order.
The Effect of Mortgage Debt on Your Financial Profile
Your credit score could also take a hit because of the amount of mortgage debt you have, especially if this is your first time owning a home. Luckily, there is a good side and a bad side to this.
Let’s start with the negative. Since a home costs so much, your level of debt is going to skyrocket. This is true, especially if you’re a first-time homebuyer or someone who just upgraded to a more expensive home.
Think about it: Say your previous levels of debt included a small credit card balance, a student loan, and a car payment, and that came to about $65,000 in debt. If you buy a $200,000 house, you’re nearly quadrupling your level of debt.
Yes, you were approved for the home loan and can afford the monthly mortgage payments. However, that is still a significant number to be added to your credit reports, and your credit history will reflect this change. It’s not going to plummet by any means, but you will notice a decrease.
How Your Mortgage Affects Debt-to-Income Ratios
Another way your new mortgage can influence your access to credit is through your debt-to-income ratio. This isn’t part of your credit score, but it is part of how future lenders analyze your application for credit. Basically, your DTI is how much monthly debt payments you owe versus how much money you earn each month.
Rent isn’t included in your DTI, but mortgages are. So, the next time you go to apply for a car loan or refinance your mortgage, you’ll have to consider how much overall debt you pay each month compared to your pre-tax earnings.
The Positive Impact of Timely Mortgage Payments on Credit
Now let’s get into the positive effects that buying a home can have on your credit score. The first impact is that your credit mix becomes more varied.
This category actually accounts for 10% of your credit score. Therefore, having an installment loan like a mortgage helps more than just having revolving credit like a credit card. 10% may not seem like a lot, but it can help offset some damage caused by the negative side of purchasing a home.
The most important thing you can do to increase your credit score is to pay all of your bills on time. And having a mortgage is a great way to add positive history to your credit report. That’s because while most creditors report negative payments to the three major credit bureaus, many don’t actually report positive payments. So, you’re penalized for negative behavior, but sadly, not rewarded for good behavior.
Mortgage payments, on the other hand, are regularly reported to each of the three credit bureaus: Equifax, Experian, and TransUnion. And since 35% of your credit score is determined by your payment history, on-time payments each month can make a significant difference.
Strategies to Maintain a Strong Credit Score After Buying a Home
Even after you’ve purchased your home, it’s still essential to keep your credit scores in top shape. You never know when you’ll need credit again, and you’ll want to ensure you have access to the best rates. Even if you’re not planning to use new credit for a car loan or personal loan.
You may want to refinance your mortgage in a few years to get a better interest rate, cash out some equity, or take off your mortgage insurance. To do any of those things, you’ll continue to need a strong credit history. Follow these tips to ensure your credit score stays where you want it to be.
#1: Monitor your credit report annually.
You can get free copies of your credit reports each year from AnnualCreditReport.com. This is helpful in several ways. First, it allows you to check to make sure all of your personal and financial information is listed accurately.
More importantly, however, is that it allows you to detect whether someone has fraudulently opened up any type of credit account in your name. Identity theft is a growing concern. Staying on top of your credit history keeps your identity and your finances safe.
#2: Continue to make your payments on time.
It’s vital to your credit history to make timely payments. Even one 30-day late payment can stay on your credit report for years, causing a major drop in your credit score. And the consequences just get worse as the delinquency ages to 60 and 90 days.
It’s easy to get swept away by all the new excitement and responsibilities that come with a new house. Just be sure to keep up with your other financial obligations during that time.
#3: Keep your debt low.
Since you just added a large new mortgage to your credit report, it’s wise to keep your other debts as low as possible, particularly your credit card balances. Try not to exceed 30% of your available balance on any of your cards. If you do, your credit score is likely to fall. Instead, try to spread out your balances across cards while you work on paying them off.
Buying a house does indeed impact your credit score. However, the impact is not so dramatic that buying a house isn’t worth it. After all, the purpose of the credit score itself is to help prove your creditworthiness to lenders so you can borrow money when the need arises.
As long as you can afford your monthly payments, purchasing a house could very well be a wise investment. It allows you to put down roots while growing equity in your home.
Bottom Line
Purchasing a home is a significant financial milestone that can affect your credit in various ways. While it might initially lower your credit score due to inquiries and increased debt levels, it also offers an opportunity to build and improve your credit over time through regular mortgage payments.
The key is to manage your debt-to-income ratio effectively and to maintain good credit habits. This includes monitoring your credit report, keeping debt levels under control, and ensuring timely payments. By doing so, you can enjoy the benefits of homeownership while nurturing a strong financial standing.
In summary, buying a house is more than acquiring property; it’s a strategic step in building a secure financial future. With thoughtful management, the journey to homeownership can enhance your credit profile and open doors to future financial opportunities.
When applying for a mortgage, it’s essential to understand the credit scores that mortgage lenders use to assess your creditworthiness. By familiarizing yourself with these models, you can better prepare for the mortgage application process and increase your chances of obtaining favorable loan terms.
Mortgage Lending FICO Scoring Models
Mortgage lenders typically rely on industry-specific FICO scores from each of the three major credit bureaus—Experian, TransUnion, and Equifax. The commonly used FICO scores for mortgage lending include FICO Score 2 (Experian/Fair Isaac Risk Model v2), FICO Score 5 (Equifax Beacon 5), and FICO Score 4 (TransUnion FICO Risk Score 04).
Lenders often obtain a single report containing credit reports from all three credit bureaus and their associated FICO scores. They may base their decision on your middle credit score or, if you’re applying jointly, the lower middle score.
Understanding the Role of the Major Credit Bureaus
The three credit bureaus—Experian, TransUnion, and Equifax—collect and maintain data in your credit reports, which help determine your credit scores. These reports include information about your payment habits, credit utilization, duration of credit accounts, variety of credit types, and recent inquiries for new credit.
Mortgage lenders rely on your credit reports to evaluate your credit risk and predict your ability to repay a mortgage loan. A good credit score often reflects a positive credit history and indicates that you are a responsible borrower, increasing your chances of securing a mortgage.
Credit Scores and Their Impact on Mortgage Rates
Your credit score affects the mortgage interest rates you’ll be offered. Borrowers with higher credit scores are generally offered lower rates because they are considered less risky. A lower credit score may result in higher rates or even being denied a mortgage.
For example, if you’re applying for an FHA loan, the minimum credit score required is typically 580. However, a higher credit score may qualify you for better interest rates and more favorable terms.
Credit Score Factors that Impact Your Mortgage Application
When mortgage lenders assess your creditworthiness, they consider various factors that make up your FICO credit score. Understanding these components and their impact on your credit score can help you improve your creditworthiness and qualify for better mortgage terms. Here’s a closer look at each factor and how it affects your credit score:
Payment History (35%): Your history of making on-time payments is the most crucial factor in determining your FICO score. Lenders view consistent, timely payments as a sign of financial responsibility, increasing their confidence in your ability to repay a mortgage loan. Focus on making all of your payments on time, as even one late or missed payment can have a significant impact on your FICO score.
Credit Utilization (30%): This factor measures the proportion of your available credit that you’re using. A high credit utilization rate may signal to lenders that you’re overextended and may have difficulty managing your debt. Aim to keep your credit utilization below 30% to show responsible credit management and improve your credit score.
Length of Credit History (15%): The longer your credit history, the more data lenders have to assess your creditworthiness. A lengthy period of responsible credit management signals to lenders your reliability in handling credit. If you’re new to credit, consider becoming an authorized user on a family member’s account or opening a secured credit card to establish a credit.
Types of Credit (10%): A diverse mix of credit types, such as credit cards, a car loan, and a mortgage, can have a positive impact on your FICO score. Lenders like to see that you can manage different types of credit responsibly. However, avoid opening new credit accounts solely to diversify your credit mix, as this could lead to an increase in credit inquiries and a decrease in your credit score.
Recent Credit Inquiries (10%): Each time you apply for credit, a hard inquiry is recorded on your credit report. Multiple hard inquiries within a short period can negatively impact your FICO score, as it may signal to lenders that you’re seeking multiple sources of credit. Limit credit applications, especially in the months before applying for a mortgage.
See also: Does Buying a House Hurt Your Credit?
Different Credit Scoring Models
There are various credit scoring models used by lenders, including FICO credit scores and VantageScore. While FICO scores are the most widely used, especially for mortgage lending, VantageScore is another credit scoring model that is gaining popularity.
FICO and VantageScore have different algorithms, which can result in variations in your credit scores. However, both models consider similar factors when calculating credit scores, such as payment history, credit utilization, length of credit history, types of credit, and recent inquiries.
Debt-to-Income Ratio and Its Impact on Mortgage Approval
The debt-to-income ratio (DTI) is another critical factor that mortgage lenders consider when you apply for a mortgage. Your DTI is calculated by dividing your total monthly debt payments by your gross monthly income. A lower DTI indicates that you have a better balance between debt and income, making you a less risky borrower.
Mortgage lenders typically prefer borrowers with a DTI below 43%, although some may accept higher ratios for borrowers with excellent credit scores or substantial savings. It’s essential to keep your DTI low to increase your chances of mortgage approval and secure better interest rates.
How to Improve Your Credit Score for Mortgage Applications
To maximize your chances of qualifying for a mortgage or getting better rates, take the following steps:
Check your credit score: Obtain your FICO score from your credit card company, bank, or a free credit reporting service. This will give you an idea of your current credit standing and areas that may need improvement.
Review your credit report: Request your free annual credit report from each of the three major bureaus and review them for errors or inaccuracies. Request your free annual credit report from each of the three major bureaus and review them for errors or inaccuracies. Make sure any errors are corrected or removed by disputing them with each credit bureau.
Pay your bills on time: Your payment history is the most significant factor in determining your credit score. Consistently making on-time payments can positively impact all your credit scores.
Pay down credit card balances: High credit card balances can increase your credit utilization ratio, negatively affecting your credit score. Aim to keep your credit utilization below 30% to improve your credit scores.
Avoid applying for new credit: In the months leading up to your application, refrain from applying for credit, as multiple inquiries can temporarily lower your credit score.
Diversify your credit: Having a mix of credit types, such as credit cards, auto loans, and student loans, can positively impact your credit score. However, be cautious not to take on too much debt, as it can increase your DTI and negatively affect the mortgage approval process.
Mortgage Eligibility Beyond FICO Scores
While FICO scores play a crucial role in qualifying for a mortgage, lenders also consider other factors to determine your eligibility for a mortgage. They closely examine the information in your credit reports, as well as your financial records, such as bank statements, investment account statements, tax returns, and pay stubs. This information helps lenders assess your income, debts, and DTI ratio.
Other factors, such as loan amount, home location, down payment, and loan type, can also influence your mortgage approval and terms. It’s essential to shop around and compare different mortgage lenders, as they may have unique assessments and requirements.
Fannie Mae, Freddie Mac, and Credit Scoring Models
Fannie Mae and Freddie Mac are government-sponsored enterprises that buy mortgage loans from lenders. They often use the same credit scoring models as other mortgage lenders. However, they are currently reviewing the possibility of using different scoring models for mortgages, which could open up new opportunities for borrowers in the future.
Bottom Line
To secure favorable mortgage terms, you need to know which credit scores mortgage lenders use and how they impact your application. Improving your credit score, maintaining a low DTI, and managing your finances responsibly can help you become a more attractive borrower to mortgage lenders.
Stay informed about the latest developments in the mortgage industry to enhance your chances of obtaining the best possible mortgage for your needs.
Milestones, the all-in-one home management solution specifically designed for consumers to buy, move, own, sell, manage, and access mortgage services for their home seamlessly in one centralized portal, has announced its strategic alliance with FinLocker, a pioneer in digital, consumer-permissioned personal financial fitness tools focused on homeownership. This partnership will provide mortgage lenders with an end-to-end engagement solution to attract, nurture, and retain homebuyers and ensure their consumers have a smooth transition from initial interest, through the preparation for a mortgage, to closing and beyond.
FinLocker provides mortgage lenders and their originators with a hyper-personalized engagement platform to attract early-journey homebuyers to their business and nurtures them with personalized data-driven journeys using the financial tools and education embedded in the platform to achieve mortgage readiness and sustain homeownership.
Milestones complement this approach by guiding these educated leads throughout the decade-long journey of homeownership with online home management portals “hubs” that deliver a wide array of home services, such as home service providers, home value insights, home maintenance tasks, home document storage, and much more.
Together, this comprehensive solution will revolutionize the way consumers navigate the complex journey of homeownership by educating and empowering them from planning to closing, resulting in increased customer retention, and reduced customer acquisition costs for mortgage lenders.
“FinLocker is excited to partner with Milestones as the platform provides an extension of our financial fitness platform to prepare first-time homebuyers to qualify for a mortgage,” said Brian Vieaux, President and COO of FinLocker. “Mortgage lenders who use Milestones will now have an all-encompassing solution to attract, engage, nurture, retain and reactivate clients in their database.”
FinLocker and Milestones combined boast a myriad of features catering to both pre and post-transaction stages, ensuring a holistic and supportive homeownership experience.
Pre-transaction
Credit monitoring and credit score-building tools
Goal setting and budgeting for down payment saving and debt reduction
Financial Education
Homebuyer mortgage readiness assessment and guidance
Home Search
Streamlined mortgage application management
Post-transaction
Home Education Knowledge Base
Home Value and Home Equity Monitoring
Home Maintenance Task Reminders
Suggested Home Improvements to Build Equity
Home Document Storage
Home Services Vendor Marketplace
About FinLocker Headquartered in St. Louis, Missouri, FinLocker provides a secure financial fitness app that aggregates and analyzes a consumer’s financial data to offer personalized journeys to build and monitor their credit, manage their financial accounts, receive their net worth and cash flow analysis, create goals, save and budget to achieve loan eligibility for a mortgage and other financial goals.
Within the FinLocker app, consumers can take a readiness assessment before applying for a mortgage, begin their property search, and securely store personal and financial documents, which can be shared with a lender directly from the app to start their loan application. Mortgage lenders and financial service providers use their white-labeled FinLocker to generate and convert leads, gain market share, cross-sell value-added products, reduce loan processing costs, decrease risk, and create customers for life. For more information, visit FinLocker.com.
About Milestones Milestones is a homeownership solution that delivers personalized client portals (“hubs”) specifically designed to engage consumers at every stage of the decade-long homeownership journey – from buying, selling, moving, and managing a home. Milestones hubs give consumers access to a wide array of home service providers, insights into home value, and much more, positioning real estate professionals to stay connected, educate, and add value to create forever clients. Learn more at Milestones.ai.
Media Contact: Monika Sollee for Milestones [email protected]
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