Homeowners 62 and older saw their collective home equity levels drop in the fourth quarter of 2023 by roughly $119 billion to $12.84 trillion, the third quarterly fall in the last year.
This is according to the Reverse Mortgage Market Index (RMMI), a measure of senior-held home equity from the National Reverse Mortgage Lenders Association (NRMLA) and data analytics firm RiskSpan.
The RMMI fell to 449.02 in Q4, a slight decline from the Q3 level of 453.19. Senior home values fell from $15.28 trillion in Q3 to $15.18 trillion in Q4, which could have been driven by an increase in senior-held mortgage debt to $19.8 billion.
RiskSpan’s analysis of the data asserted that this drop corresponds with a seasonal downturn in overall home sales, according to an email alert distributed to NRMLA’s membership.
The RMMI is often cited by reverse mortgage companies as a sign of the unrealized market potential of the industry. During Finance of America Companies Q4 earnings presentation last week, the company cited the Q3 2023 RMMI figure of $13.08 trillion as indicative of the potential for the home to serve as a senior’s “greatest retirement asset.”
Senior homeowners were big beneficiaries of the run-up in home prices observed during the COVID-19 pandemic. In 2011, the collective level of senior-held equity sat at roughly $3 trillion while in Q3 2021, the RMMI index rose by 4%, topping $10 trillion for the first time, while the index grew by 3.98% in Q4 2021. The RMMI grew by 4.91% during Q1 2022 — when it first topped $11 trillion. In Q2 2022, the RMMI grew by 4.10%.
The collective senior housing wealth figure reached a threshold of over $9 trillion for the first time in July 2021, and $8 trillion for the first time in April 2021. It had previously topped $7 trillion for the first time in March 2019.
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported an average net loss of $2,109 on each loan they originated in the fourth quarter of 2023, according to the Mortgage Bankers Association (MBA).
The loss is almost double the reported loss of $1,015 per loan in the third quarter and marks the seventh consecutive quarter of net production loss.
“The fourth quarter of 2023 was about as challenging as it could get for mortgage lenders to generate a production profit,” said Marina Walsh, MBA’s vice president of industry analysis.
“This year was exacerbated by the current lack of housing inventory and mortgage rates that increased to their highest levels of the year, keeping refinancings volumes low. These factors contributed to a ‘perfect storm’ that resulted in a decline in production volume for the quarter that reached the lowest level for this report since 2014.”
Total production revenue – including fee income, net secondary marketing income and warehouse spread – increased to 334 bps in Q4, up slightly from 329 bps in the quarter prior. On a per-loan basis, production revenue decreased to $10,376 per loan in the fourth quarter, down from $10,426 per loan in the third quarter.
Total loan production expenses – such as commissions, compensation, occupancy, equipment and corporate allocations – rose to $12,485 per loan in Q4, up slightly from $11,441 per loan in the previous quarter. Loan production expenses averaged around $7,389 per loan.
Despite tough market conditions, some companies have been able to weather net production losses through cash reserves or infusions and strong servicing cash flows.
Servicing operating income – which excludes mortgage servicing rights (MSR) amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses and gains/losses on the bulk sale of MSRs – was $104 per loan in Q3, the MBA noted.
The sale of MSRs does not directly impact earnings as a revenue stream, but the conversion of MSRs into cash via sales deals bolsters a lender’s cash flow and overall liquidity.
The MBA expects mortgage origination volume for one- to four-family homes to post $390 billion in Q1 2024, down from $399 billion in Q4 2023, according to its latest forecast.
The trade group also projected the 30-year fixed mortgage rate to average around 6.9% in Q1 2024 before falling to 6.6% in the next quarter.
Whether you’re going on a far-flung adventure this spring or plan on sticking closer to home, the quarterly bonus categories on the Chase Freedom Flex℠ and the original Chase Freedom® give you plenty of opportunities to earn elevated rewards on everyday purchases and maybe some splurges, too. And if you have the Flex version of the card, the quarterly categories are especially rich.
Holders of the Chase Freedom Flex℠ and the Chase Freedom® earn 5% cash back on up to $1,500 in combined spending in bonus categories that change every three months. From April 1 through June 30, 2024, the bonus categories are:
Select hotel bookings.
If you have the Chase Freedom Flex℠, you may notice that a couple of those categories already earn extra cash back because of the card’s fixed bonus rewards. The quarterly bonus rates “stack” on top of those. That means Flex cardholders (but not holders of the original Freedom) can earn up to 9% back on hotels booked through Chase, and up to 7% back on dining purchases. More on that below.
To receive elevated rewards, cardholders need to activate the bonus categories online by June 14. Rewards will apply retroactively, so as long as you activate by the deadline, you’ll earn extra cash back on all eligible purchases made throughout the quarter.
Chase Freedom® and Chase Freedom Flex℠ bonus rewards categories for 2024
Q1 (Jan. 1-March 31)
Grocery stores.
Fitness clubs and gym memberships.
Self-care and spa services.
Q2 (April 1-June 30)
Select hotel bookings.
Restaurants.
Amazon.com.
Q3 (July 1-Sept. 30)
TBD (In 2023: Gas stations and electric vehicle charging; select live entertainment).
Q4 (Oct. 1-Dec. 31)
TBD (In 2023: PayPal; wholesale clubs; select charities).
Stacked rewards let Flex cardholders score big
Amazon is a mainstay bonus category for quarterly rewards, and the sheer breadth of items you can buy through the online marketplace makes it an easy way to earn extra rewards. But the other two categories — dining and select hotel bookings — have the potential to be much more valuable for Chase Freedom Flex℠ cardholders, thanks to the card’s ongoing rewards. Here’s how.
In addition to the bonus cash back cardholders can earn in rotating categories, the Chase Freedom Flex℠ also has the following “fixed” bonus categories that don’t change:
3% back at restaurants.
3% back at drugstores.
5% back on qualifying Lyft services purchased through the Lyft app (through March 31, 2025).
1% back on all other purchases.
Hotels booked through Chase already earn elevated rewards throughout the year (5% back), as do dining purchases (3% back). The quarterly bonus doesn’t replace those rewards; it “stacks” on top of them, meaning you can earn up to 9% back on hotels booked through Chase, and up to 7% back on dining purchases.
The original Chase Freedom® (which is no longer available to new applicants) has the same 5% rotating bonus calendar but does not have the fixed categories. So holders of that card will earn 5% in all of the quarterly categories.
🤓Nerdy Tip
Why 7% and 9%? When Chase awards 5% cash back in its quarterly categories, it does so using this logic: Purchases that normally get 1% cash back are now earning an additional 4% cash back — so the quarterly bonus is 4% on top of the usual rewards. So for the second quarter of 2024, restaurant spending that usually earns 3% with Chase Freedom Flex℠ earns 4% on top of that, for a total of 7%. Hotels booked through Chase usually earn 5%, so adding 4% to that gets you to 9% cash back.
Watch out for foreign transaction fees
These elevated rewards on dining and hotels booked through Chase make the Chase Freedom Flex℠ and Chase Freedom® ideal travel companions for spring and early summer trips. But if you’re traveling internationally, you might want to think twice before you whip out either card to pay for a meal or a hotel reservation.
Chase generally charges a 3% foreign transaction fee on its nontravel credit cards, which will cut into the value of any rewards you earn. The reward rates are high enough that you can still come out ahead, but you may need to do a little math first.
The information related to Chase Freedom® credit card has been collected by NerdWallet and has not been reviewed or provided by the issuer of this card.
loanDepot greatly reduced its costs in 2023 while revenues were in free fall amid a contracting market. It wasn’t enough to bring the California-based lender company profitability, but it narrowed its losses.
Operationally, loanDepot entered 2024 by dealing with a cyberattack that brought its systems down and a forecast for market conditions to improve.
loanDepot recorded a non-GAAP adjusted net loss of $142.4 million in 2023, compared to a $457.6 million loss in 2022. By GAAP accounting standards, the net loss last year was $235.5 million, per filings with the Securities and Exchange Commission (SEC) on Tuesday.
In 2023, a year marked by lower volume throughout the market, loanDepot’s revenues decreased 22% to $974 million. The reduction was impacted by its exit of the wholesale channel in 2022, and it was partially offset by growth in servicing income and home equity lines of credit (HELOCs), as well as higher margins.
Expenses, meanwhile, decreased by 36% to $1.25 billion in 2023. But this cutback could have been even larger if loanDepot hadn’t had a $27 million expense related to restructuring charges, impairments and accruals related to the expected settlement of outstanding litigation.
President and CEO Frank Martell said in a prepared statement that the company made progress last year by “significantly resetting its cost structure and making critical investments in our technology platforms and business processes.”
According to Martell, the company entered 2024 with a more “durable revenue model built around a strong multi-channel origination business and a low cost, high-quality servicing platform.” The company will “continue to aggressively pursue automation and productivity programs,” he added.
In the fourth quarter of 2023, when it was the target of a cyberattack, the company reached $229 million in revenues, up 35% year over year but down 14% quarter over quarter due to seasonality.
Expenses were $303 million in the fourth quarter, a year-over-year decline of 12% and 1% less than the previous quarter. loanDepot accrued $3.7 million in legal expenses regarding the expected settlement of outstanding litigation, compared to $2 million in Q3 2023.
The company’s non-GAAP net loss was $26.6 million in Q4 2023, compared to $25.4 million in the previous quarter. The GAAP net loss was $59.7 million in the final three months of last year.
In Q4 2023, the company announced an additional $120 million of annualized productivity improvements expected for 2024.
Through Feb. 29, the lender said it had achieved nearly 86% of this goal, which comes primarily from lower third-party expenses, organizational efficiencies and lower real estate expenses, executives told analysts during a call on Tuesday.
loanDepot chief financial officcer David Hayes said in a statement that the company reduced its cost structure by $693 million in 2023, which “has allowed us to maintain a strong liquidity position and at the same time support reinvestment in critical platforms and programs.”
The company reported a cash balance of $661 million at the end of 2023.
Operations data
loanDepot’s origination volume ended 2023 at $22.6 billion, down from $53.7 billion in the previous year. But its pull-through gain-on-sale margin was 2.75% last year, better than the 1.94% registered in 2022. Executives said during the call with analysts that margins are also improving due to competitors exiting the market.
In the fourth quarter, the company produced $5.3 billion in mortgages, compared to $6 billion in the previous quarter and $6.3 billion in the same period of 2022. Margins ended Q4 at 2.96%. Purchase loans comprised 76% of the total.
Hayes told analysts that fourth-quarter margins came in “above our guidance of 245 to 285 basis points,” mainly due to “an increase in volume and profit margins of our HELOC product, and wider profit margins on our conforming and FHA production, offset somewhat of a seasonally larger proportional contribution from our joint venture channel.”
Company executives project first-quarter 2024 volume of $3.5 billion to $5.5 billion. The pull-through gain-on-sale margin is expected to be between 2.7% and 3%.
According to Martell, the recent cyberattack will have an impact on the company’s first-quarter financial results, “but is not expected to have a material impact from a full year perspective.”
“The challenges presented by the increasing sophistication of the perpetrators of cyber attacks requires unprecedented focus and close coordination between the public and private sectors to ensure the private sector’s ability to prevent these types of intrusions of the future,” Martell said, adding that loanDepot executives would not take analyst questions related to the matter due to its “sensitive nature.”
Hayes added that the guidance for volumes reflects the seasonal decrease in homebuying activity in the first quarter, as well as the impact of the January cyber event, which will also bring an additional $12 million to $17 million in expenses.
loanDepot’s unpaid principal balance in its servicing portfolio increased to $145 billion as of Dec. 31, up from $143.9 billion as of Sept. 30, 2023. Servicing fee income rose to $132.5 million in Q4 2023, compared to $120.9 million in the previous quarter.
“In 2023, we successfully brought half a million customer servicing portfolio in-house,” Martell said. “Despite all the challenges that were presented by the market in 2023, we prioritized growing our assets under management, which ended the year at $145 billion.”
Looking forward, Martell said he expects market volumes will improve from 2023 levels. “Most recently published forecasts from the Mortgage Bankers Association call for a boost in 2024 for mortgage unit volumes of approximately 17%,” Martell said.
After the earnings release, loanDepot stock was trading at $2.44, down 3.6% in the after market.
Average mortgage rates fell moderately for a third consecutive day yesterday. But don’t get too comfortable. The two economic reports that are most consequential for those rates are both due over the next few days. And they could change everything.
First thing, it was looking as if mortgage rates today might fall, perhaps modestly. But that could change later in the day.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.1%
7.12%
-0.06
Conventional 15-year fixed
6.46%
6.49%
-0.08
Conventional 20-year fixed
7.03%
7.05%
-0.01
Conventional 10-year fixed
6.48%
6.51%
-0.11
30-year fixed FHA
6.11%
6.77%
-0.13
30-year fixed VA
6.43%
6.54%
-0.08
5/1 ARM Conventional
6.29%
7.36%
Unchanged
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?
Are the steady falls in mortgage rates we’ve been seeing in recent days the start of the sustained downward trend I’ve been predicting? It’s possible. But I doubt it.
I’m not expecting that to begin properly for at least a couple of months and perhaps longer.
So, for now, my personal rate lock recommendations are:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif 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 ticked down to 4.08% from 4.09%. (Good for mortgage rates. However, yields were rising this morning.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad 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 inched down to $78.53 from $78.60 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices edged up to $2,174 from $2,158 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 — increased minimally to 75 from 74 out of 100. (Bad 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 move downward. 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?
Today
This morning, we finally saw the February jobs report (aka the employment situation report). And it might prove less bad for mortgage rates than one might fear.
Yesterday, I described the report’s three headline figures. Here they are again with this morning’s actual figures shown in bold:
Nonfarm payrolls (the number of new jobs created that month) — Today’s actual: 275,000. Markets were expecting that to be 198,000, well down from January’s 353,000
Unemployment rate — Today’s actual: 3.9%. Markets were expecting that to be 3.7%, unchanged from January
Average hourly wages — Today’s actual: 0.1%. Markets were expecting a 0.2% rise, much lower than January’s 0.6% increase
You can see that the unemployment rate and average hourly earnings numbers would typically be good for mortgage rates. But markets tend to react to nonfarm payrolls primarily. And The Wall Street Journal (paywall) reported the data under the headline, “Hiring Boom Continues With 275,000 Jobs Added.”
Still, the news wasn’t as dire as it could have been: Two out of three ain’t bad. So, I’m hoping that markets won’t punish mortgage rates too badly.
One caveat on today’s report — and other important ones. Markets don’t always respond in the ways we’ve come to expect. Sometimes, there’s a delayed reaction. Other times, investors might discover something hidden in the minutiae of the report that changes their response. And, occasionally, they just act perversely.
Next week
Just as this week has been dominated by this morning’s jobs report, next week is likely to pivot on Tuesday morning’s consumer price index (CPI).
We’re also due February’s retail sales figures on Wednesday and various inflation and other reports. But the CPI’s likely to rule next week.
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 lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Mar. 7 report put that same weekly average at 6.88% down from the previous week’s 6.94%. But note that 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 four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Feb. 12 and the MBA’s on Feb. 20.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.5%
6.3%
6.1%
5.9%
MBA
6.9%
6.6%
6.3%
6.1%
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.
Whether you’re planning on hitting the road for spring or summer break or launching yourself into home improvement projects, Discover’s bonus categories for the second quarter of 2024 can offer some value for your spending.
From April 1 through June 30, 2024, holders of eligible cards like the Discover it® Cash Back and Discover it® Student Cash Back can earn 5% cash back at gas stations, electric vehicle charging stations, home improvement stores and on public transit, on up to $1,500 in combined spending for the quarter. All other purchases earn 1% cash back. Activation is required to be eligible for the higher rewards rate.
Here’s what you need to know about which purchases qualify.
Discover bonus rewards categories for 2024
Q1 (Jan. 1–March 31)
Restaurants.
Drugstores.
Q2 (April 1–June 30)
Gas stations/EV charging stations.
Home improvement stores.
Public transit.
Q3 (July 1–Sept. 30)
TBD (In 2023: Gas stations; digital wallets).
Q4 (Oct. 1–Dec. 31)
TBD (In 2023: Amazon, Target).
Discover’s Q2 bonus categories unpacked
Discover’s 5% categories come with terms. For the second quarter of 2024, here’s what will qualify:
Gas stations and EV charging stations
To earn the bonus rate, a purchase must be classified as made with a place that sells automotive gasoline or offers an electric vehicle charging station to the public. When you’re on the go, those purchases made at the pump or inside the gas station may also qualify for the elevated rewards rate.
Some purchases may not qualify, such as those made at supermarkets, supercenters, wholesale clubs and parking garages.
Public transit
Eligible public transit purchases that earn 5% back will include passenger buses, railways, ferries, taxis and rideshare services made in the U.S. Long-range passenger land, rail and water transportation services won’t qualify.
Home improvement stores
If you’re planning some home renovation projects or need to stock up on supplies, you can earn more value by doing it within Discover’s promotional window.
Eligible purchases will include those made online and in store at home improvement stores; building supply stores like lumber, paint and hardware stores; and lawn, nursery and garden supply stores. Purchases made through third parties like contractors may not qualify to earn 5% back. And purchases made at stores that offer home furnishings, home appliances, plumbing, heating supply and floor coverings won’t qualify.
Maximizing Discover’s Q2 bonus categories for 2024
To make the most of your bonus categories for the quarter, don’t forget these steps:
Log in to your Discover account to activate the bonus categories.
Use your Discover card for any purchases you make in those categories.
Track spending to know when or whether you’ve reached the $1,500 spending limit. (You can view an automated tracker while signed in to your Discover account.)
Considering the Discover it® Cash Back?
The Discover it® Cash Back card can be a worthy contender for your wallet if you’re organized enough to keep track of bonus categories that change every quarter and require activation. It’ll also work best if you’re not in the habit of maintaining a monthly balance, as the card’s steep interest charges will chip away at the value of rewards.
The card’s features include:
Annual fee:$0.
APR:0% intro APR for 15 months on purchases and balance transfers, and then the ongoing APR of 17.24%-28.24% Variable APR.
Sign-up bonus: INTRO OFFER: Unlimited Cashback Match for all new cardmembers – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
The Federal Housing Finance Agency (FHFA) announced on Thursday that the transition to new credit score requirements is expected to occur in the fourth quarter of 2025, a decision commended by the mortgage industry.
That’s when the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will acquire single-family loans based on the FICO 10T and VantageScore 4.0 credit models, replacing the Classic FICO score that has been in place for decades. The GSEs will also transition from a tri-merge system to a bi-merge system at that time.
“Following extensive stakeholder engagement and input, FHFA is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model,” the FHFA said in a statement.
If implemented in Q4 2025, the transition to the new requirements will take three years since the change was first announced in October 2022. The original implementation timeline was for first-quarter 2024, but it was delayed by concerns expressed by stakeholders and members of the U.S. Congress.
The GSEs are aiming to accelerate the publication of VantageScore 4.0 historical data, from Q1 2025 to Q3 2024. But they are still working alongside the FHFA to achieve conditions for acquiring and publishing FICO 10T model data.
“Synchronizing bi-merge credit reporting with the implementation of the new credit score model requirements will reduce complexity for market participants, which is a key objective of our transition efforts,” FHFA director Sandra L. Thompson said in a statement.
The FHFA believes the new models will increase accuracy in credit scoring as they provide multiple views of credit risk for market participants. This should also improve competition as credit reports from two, rather than three, of the national credit bureaus may be used.
Scott Olson, executive director of the Community Home Lenders of America (CHLA), commended the FHFA for updating its credit score requirements.
“The details of these updates will be important, and we look forward to working with FHFA over the next few years to ensure that this saves money for borrowers — particularly those who are underserved and first-time homeowners,” Olson said.
But while the industry expects changes, credit reports have become more expensive.
In 2024, FICO is charging one price — higher than last year’s price — to all mortgage lenders, independent of their volumes, in a departure from the tier-based pricing structure it implemented in early 2023. It’s also collecting the same per-score price for soft pulls and hard pulls, an initiative that started in 2023 despite significant differences in these products.
High costs have accelerated the transitions by some lenders to new credit models for several products, mainly those outside of the GSE space. The list includes lenders such as Movement Mortgage, CrossCountry Mortgage and Premier Lending.
Average mortgage rates edged higher yesterday. Although the change was negligible, it was enough to return them to their recent high, first reached last Thursday. However, they’re still way lower than the near-8% levels seen as recently as last October.
Earlier this morning, markets were signaling that mortgage rates today might barely move. However, these early mini-trends often switch direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.36%
7.37%
+0.01
Conventional 15-year fixed
6.76%
6.79%
Unchanged
Conventional 20-year fixed
7.06%
7.09%
Unchanged
Conventional 10-year fixed
6.65%
6.68%
-0.01
30-year fixed FHA
6.42%
7.11%
+0.03
30-year fixed VA
6.71%
6.83%
-0.01
5/1 ARM Conventional
6.18%
7.32%
-0.01
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?
Many investors now expect the Federal Reserve to implement its first cut in general interest rates in June. And to make only three modest cuts during 2024.
That’s very different from their expectations at the start of this year. Then, they thought the first cut would be in March followed by five more before Dec. 31.
It’s this shift in expectations, from the optimistic to the realistic, that largely explains why mortgage rates have been moving higher in recent weeks. And it’s my top reason for now thinking that mortgage rates probably won’t begin to trend consistently lower until well into the second (April-June) quarter.
So, for now, my personal rate lock recommendations are:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif 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 held steady 4.30%. (Neutral for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were 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 $79.34 from $78.19 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices inched down to $2,042 from $2,044 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 — increased to 79 from 76 out of 100. (Bad 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 hold steady or close to steady. 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?
Today
This morning brought the second reading (of three) of gross domestic product (GDP) during the fourth quarter of last year. And it will likely hardly affect mortgage rates.
Today’s figure showed growth that quarter at 3.2%. Markets had been expecting it to be unchanged from its first reading at 3.3%. And they’d already priced that figure into mortgage rates.
Ten-year Treasury notes edged lower on the news. But mortgage rates didn’t immediately follow, and the difference between the actual figure and market expectations may not be enough to change them.
Tomorrow
We’re due January’s personal consumption expenditures (PCE) price index tomorrow. This is the Federal Reserve’s favorite gauge of inflation. So it certainly has the potential to move markets and mortgage rates, not least because it could influence decisions about the timing and scope of the Fed’s future cuts in general interest rates.
Tomorrow brings four key figures: two for the all-items PCE price index and two for the “core” PCE price index. The core figure is the all-items one after volatile food and energy prices have been stripped out, something that supposedly reveals underlying inflation. The Fed focuses on core figures.
There are two figures for each of these indexes. The first shows how prices moved in the month of January. And the second is the year-over-year (YOY) number, which shows how the same prices moved between Feb. 1, 2023 and Jan. 31, 2024.
Tomorrow’s inflation and other data
Here are what markets are expecting tomorrow (with December’s actual figures in brackets):
January all-items PCE price index — 0.3% (0.2 % in December)
January core PCE price index —0.4% (0.2% in December)
YOY all-items PCE price index — 2.4% (2.6 % in December)
YOY core PCE price index —2.8% (2.8% in December)
You can see that markets are expecting a small increase in most of these measures of inflation. And, because they’re expecting them, they’ll have already priced those into mortgage rates. So, if the figures come in as forecast, mortgage rates might barely move.
However, higher-than-expected figures could push those rates upward. Conversely, lower-than-expected ones could drag them downward.
Other economic reports due tomorrow rarely move mortgage rates far or for long, especially when they’re overshadowed by a major report like the PCE price index.
Ten senior Fed officials have speaking engagements tomorrow and on Friday, all after tomorrow’s report. And those could change mortgage rates if enough of them say things that cheer up or depress investors. But we can only wait to hear their remarks.
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 lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Feb. 22 report put that same weekly average at 6.90% up from the previous week’s 6.77%. But note that 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 four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Feb. 12 and the MBA’s on Feb. 20.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.5%
6.3%
6.1%
5.9%
MBA
6.9%
6.6%
6.3%
6.1%
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 servicers, regulators and economists are closely watching the delinquency rates for Federal Housing Administration (FHA) loans following a spike in the fourth quarter of 2023.
Industry experts say that although there’s a correlation between unemployment and delinquency rates, some homeownership costs — including insurance — have increased significantly over the past two or three years, which has had a strong financial impact on homeowners. But experts also say the situation is not as bad as the one experienced during the COVID-19 pandemic.
The sources spoke about these issues during this week’s Mortgage Bankers Association (MBA) Servicing Solutions Conference & Expo in Orlando.
The latest MBA data shows that the delinquency rate for one- to four-unit properties rose to 3.88% at the end of 2023, compared to 3.62% in the third quarter, but still below the historic average of 5.25%. Meanwhile, the FHA-insured loan delinquency rate recorded a larger jump during the same period to 10.81%, up from 9.5%, the highest level since Q3 2021.
“We are seeing a bit of a pickup for two quarters in a row, but it’s very important to keep in mind that we were at the absolute lowest point in delinquencies in the third quarter of 2023,” Marina Walsh, MBA vice president of industry analysis, research and economics, said in a market outlook session.
According to Walsh, the delinquency rate for FHA loans increased by 130 basis points from the third to fourth quarters, but the current level is “certainly not nearly where it was at the height of COVID-19.”
In addition, she said that foreclosures are not picking up, so borrowers are either paying off their loans before entering the severe delinquency stage, or if they are in the serious delinquency stage, they are entering a workout.
“The question I posed to all of you is, ‘Is this a blip or a bigger trend?’” Walsh said, adding that based on data MBA has received from the industry, she believes the delinquency rate could come down a bit in first-quarter 2024 following the end of the busy holiday shopping season.
“All these increases in costs impact people’s ability to pay, without question,” Steven R. Bailey, senior managing director and chief servicing officer at PennyMac Financial Services, said in an executives’ perspective session. “But we still see the strongest correlation is between unemployment and delinquency.”
Bailey said that although increases in delinquencies are not a trend that servicers want to see, “I don’t look at it with the same fear that I used to look like.”
Homeowners insurance
According to industry experts, one of the costs affecting homeowners is their insurance, which can lead to increases in delinquencies. California and Florida are among the states where the situation is more evident.
Seven of the 12 largest insurers in California have either paused or restricted new policies over the past 18 months, including State Farm and Allstate. In September, the state’s top insurance regulator announced that new rules are in the works to persuade insurers to remain.
In Florida, the departure of many insurers and reinsurers has resulted in homeowners paying an average of nearly $4,000 a year, almost three times the U.S. average, according to estimates from the Insurance Information Institute. In some instances, homeowners have seen their insurance costs more than triple, but a new bill seeks to help them.
“That’s a combination of both rates from a carrier perspective, as well as just the increase in home values,” Patrick A. Sullivan, vice president of industry relations and compliance at Assurant, said in a session about homeowners insurance.
Sullivan said reinsurance is another factor weighing on homeowners insurance costs, a function of the global capital markets. He added that reinsurance costs have more than tripled over the past three years.
“Homeowners insurance is certainly a problem we need to tackle together,” John Bell, executive director of loan guaranty service at the U.S. Department of Veteran Affairs (VA), said during a regulatory session.
“I hope that there are others on this panel and others out there that want to work together to try to solve some of those rising prices that our homeowners just can’t absorb, and at some point in time, it’s going to hurt the market.”
Bell said that if a home costs $800 per month more than last year, the industry needs to figure out how to solve it. Bell and the VA are working to move forward with options to help veterans avoid foreclosure, including a partial claim solution.
FHA Commissioner Julia Gordon, who announced the agency’s new payment supplement partial claim during the conference, added that the issue of homeowners insurance will take a village to tackle.
“And that’s going to take real work in the states also, which is hard, and we just have to do it if we want people to be protected,” Gordon said.
The Broker Action Coalition (BAC) — an independent, nonprofit organization that initiates communications between mortgage brokers and their legislators — formed its first board of directors and leadership council as it kickstarts its work as an independent nonprofit organization.
The newly formed board has 10 voting member seats consisting of four lenders, four brokers, BAC chief advocacy officer and co-founder Brendan McKay, and CEO and co-founder Katie Sweeney.
The industry side of the board includes Eddy Perez, CEO of Equity Prime Mortgage (EPM); Phil Shoemaker, CEO of The Loan Store; Chris Vinson, CEO of Windsor Mortgage; and Kevin Peranio, chief lending officer of Paramount Residential Mortgage Group (PRMG).
Representing the broker side are Elena Boland of Wholesale Mortgage Services, Joseph Dionne of appli Home Loans, Major Singleton of Edge Home Finance and Daniel Iskander of West Capital Lending.
BAC also created seven nonvoting roles that include vendor advisory roles and a leadership council.
The three vendor advisers are Brian Vieaux, president and COO of FinLocker; Sam Parker, owner of My Credit Guy; and Sofia Rossato, president and general manager of Floify.
The leadership councils will focus on specific consumer groups to advocate for diverse causes across a wide range of initiatives, BAC said.
Gay Veale, a mortgage originator at Epoch Lending, will chair the Veteran Homeownership Leadership Council.
Mortgage broker Whitley Cooper from Advocate Home Loans will lead the Black Homeownership Leadership Council, while Amorette Hernandez from CMS Mortgage Solutions will be chair of the Hispanic Homeownership Leadership Council.
Additionally, mortgage broker Jerry Robinson from 1st Choice Mortgage Co. will chair the Government Affairs Leadership Council that focuses on federal legislation.
BAC plans to announce state legislative leadership in the coming weeks.
BAC was formed by AIME CEO Katie Sweeney in 2022 to gauge the industry’s appetite for advocacy and reform. There was no separate leadership group within BAC. Sweeney and McKay, former AIME president of advocacy, have been overseeing the work.
Since its establishment two years ago, Sweeney found immense work to be done on industry accountability and product reform, which led her to take on a full-time role at BAC.
Jonathon Haddad, president of Next Door Lending, will replace Sweeney as the chairman and CEO of AIME starting April 1.
The BAC will continue its efforts on passing the disabled veteran tax exemption bill, as well as efforts around trigger lead reform this year, Sweeney said in a previous interview with HousingWire.
Other regulatory issues that the coalition wants to tackle include the third-party originated (TPO) surcharge imposed by the Federal Housing Finance Agency (FHFA), Fannie Maeand Freddie Mac.
Among the 65,000 members of AIME, BAC was able to engage more than 50,000, according to Sweeney.
In the third quarter of 2023, the broker-driven wholesale channel accounted for slightly more than 16% market share, with retail at 55% and correspondent at 29%, according to an Inside Mortgage Finance (IMF) analysis of first-lien mortgage originations.
Brokers originated $62 billion in Q3 2023, down from $67 billion in Q2 2023 and $81 billion in Q3 2022.