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Mortgage Rates Explained: What Determines Your Rate

Quick answer

Mortgage rates are driven by the bond market — especially 10-year Treasury yields and mortgage-backed securities — plus your personal risk factors: credit score, down payment, loan type, loan amount, property type and occupancy. Lenders add their own margins, so the same borrower can see different quotes on the same day. Comparing several lenders is the simplest way to save.

By Purchase Mortgage Loan Editorial Team Checked against official sources per our editorial standardsLast updated

What affects my mortgage rate?

  • Credit score (740+ gets the best pricing)
  • Loan-to-value / down payment
  • Loan type (FHA, VA, conventional, jumbo)
  • Loan term (15-year rates are usually lower than 30-year)
  • Occupancy (investment property rates are higher)
  • Discount points paid

Rate vs APR

The interest rate determines your monthly principal and interest. The APR folds in certain fees, such as origination and points, to show the yearly cost of borrowing. A loan with a lower rate but high fees may have a higher APR.

Should I buy discount points?

One point costs 1% of the loan and typically lowers the rate by about 0.125%–0.25%. Points make sense if you'll keep the loan long enough to pass the break-even point.

Frequently asked questions

Most buyers lock after their offer is accepted. Locks usually last 30–60 days; longer locks cost more.

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Figures on this page are estimates for educational purposes only and are not a loan offer or commitment to lend. Rates, loan limits, fees and assistance programs change frequently and vary by lender, location and borrower profile. Confirm current terms with a licensed loan officer.