When mortgage rates were at historic lows, there wasn’t as much focus on the metrics that help to determine a borrower’s actual interest rate. But as you know, things are different today.
So what are some of the factors that determine YOUR interest rate?
- Credit Score: Generally speaking you want your qualifying score to be 740+. Keeping your credit utilization low and making on-time monthly payments will help to get you there.
- Loan Type: Conventional, FHA, VA, HomeReady, HomePossible….and more. Which is the best fit for you and which program offers the best terms? This is what you will be discussing with your lender during your pre-approval.
- Loan Term: Shorter loan terms typically have lower interest rates.
- Down Payment: The larger your down payment, the lower your LTV (loan to value). Loans with low LTV’s are deemed less risky and generally have lower interest rates as a result.
Please feel free to reach out with questions.
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