Rates data is based on a borrower with good credit, a conforming loan amount
(at least $200,000 but less than the national conforming loan amount), and a loan-to-value
ratio of less than 80% (For purchase loans, this corresponds to a down payment of 20% or more).
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Expert Forecast
“As of now, tension has not fully dissipated in the Middle East, which raises the possibility of very divergent outcomes for mortgage rates over the next month. In recent weeks, news of a potential escalation in the conflict has tended to push longer-term interest rates, including mortgage rates, higher, while headlines suggesting deescalation or resolution have had the opposite effect. Put simply, the conflict continues to play an outsized role in investor assessments of the economic outlook and thus on interest rates including mortgage rates.
“There are other headlines, but I don’t expect them to matter as much. We will see a leadership transition from the Fed this week, but the chair is just one vote among 12. Further, a resurgence in inflation is likely to firm up the positions of those on the (Federal Open Market Committee) who believe that waiting or even hiking is the next most reasonable policy move.
“Taken together, these trends are likely to imply modest upward pressure on mortgage rates in the next month, pushing them toward the upper 6% range. But there is very real potential for a sharper move back toward the low 6% range if we see a breakthrough in the Middle East.”
-Danielle Hale, chief economist, Realtor.com
With so many mortgage companies out there, it can be a challenge to narrow down which lender is best for your needs. To start, you can evaluate mortgage lenders based on a few key factors:
- Interest rates. Because mortgage rates can vary by lender and loan type, you may find a deal by comparison shopping.
- Closing costs. When you factor in closing costs, which can include application, appraisal and loan origination fees, the lender with the lowest rate may not offer the lowest overall mortgage costs. Compare costs between lenders using the annual percentage rate, or APR.
- Loan types. Look for a mortgage lender in your state with options that work for you, whether that’s a 30-year fixed-rate loan, a VA loan or something else.
- Customer service reviews. Lenders should not only offer great loan rates but also treat customers well. Read lender reviews to see what customers have to say about their experience.
The right mortgage for you will depend on your finances, plans and preferences. Here are common types of mortgages.
Conventional Mortgages
Conventional loans are not guaranteed by the federal government and are funded by private lenders. You may need a minimum credit score of 620, a maximum debt-to-income ratio of 43% and a down payment of at least 3% to qualify.
Government-Backed Mortgages
You may have more success getting a government-backed mortgage than a conventional loan because a federal agency insures it, reducing the lender’s risk. These loans are issued by private lenders and guaranteed by the government:
- FHA loans. Loans backed by the Federal Housing Administration require as little as 3.5% down. You may also qualify for an FHA loan with a credit score as low as 580 with a 10% down payment.
- USDA loans. The U.S. Department of Agriculture offers zero-down mortgages in designated rural areas.
- VA loans. Eligible military personnel and veterans can get a mortgage with no down payment and no mortgage insurance through the Department of Veterans Affairs.
Jumbo Mortgages
Jumbo loans exceed conforming loan limits set by the Federal Housing Finance Agency and have stricter qualification standards because of the risk to lenders.
Mortgage lenders want to know the risk of lending you money. A lender will look at not only your credit history but also your income, down payment and other criteria when reviewing your application. Here’s what lenders will consider when determining your eligibility for a mortgage:
- Credit score. Your credit score is a major factor, but the minimum credit score to buy a house can vary by lender and loan program.
- DTI ratio. Your debt-to-income ratio is the percentage of your monthly income that is spent on repaying debt.
- Income. There are a few schools of thought to determine how much house you can afford, but lenders usually require that your mortgage payments (including principal, interest, taxes and insurance) are less than 28% of your gross monthly income.
- Down payment. Your down payment is the amount you pay up front for the property, while the mortgage covers the rest.
- Loan amount. The larger your mortgage, the greater the risk for your lender. Lenders limit risk by following FHFA loan limits. If you want to buy a property that costs more than these limits, you can apply for a jumbo loan.
Your mortgage interest rate is the annual cost of your loan amount, expressed as a percentage of the total loan amount. It does not include fees and other costs. A 5% interest rate on a mortgage means you will pay 5% of your loan’s balance in interest each year. Your mortgage also has an annual percentage rate that reflects your interest rate plus other charges, such as most closing costs, discount points and origination fees.
The mortgage rate you ultimately receive depends on a number of factors, like:
- Your credit history. Having an excellent credit score and low debt-to-income ratio will help you qualify for the lowest market rates available. Additionally, making a larger down payment may help you snag a competitive rate.
- Market rates. The 30-year fixed mortgage rate tracks the yield on the 10-year Treasury bond, with a spread of a few points added to reflect the lender’s cost of issuing the loan – that spread can vary based on risk.
- Loan type. Different types of mortgages may carry lower or higher interest rates. For example, a nonconforming jumbo loan may have a higher rate than a conforming conventional loan. Make sure you understand your options to choose the right type of mortgage for your credit profile and your budget.
- Loan term. The term is how long you have to repay the loan. The longer the term, the lower your monthly payments. A longer term typically has a higher interest rate and higher total costs compared with a shorter loan term.
Mortgage interest rates can be fixed or adjustable. Whether a fixed- or adjustable-rate mortgage is best can depend on market conditions, your finances and how long you plan to keep your mortgage.
How Does the Federal Reserve Impact Mortgage Rates?
The Federal Open Market Committee, which is the rate-setting body of the Federal Reserve, votes several times per year to set the federal funds rate. The federal funds rate is an overnight financing rate banks charge each other, while mortgage rates are usually fixed, long-term interest rates.
The Fed doesn’t set mortgage rates; as we mention above, 30-year mortgage rates follow the bond market. However, bond investors may act in anticipation of future FOMC rate cuts (or hikes), which can impact bond pricing and thus mortgage rates.
As of April 2026, Fed policymakers intend to hold rates steady for the remainder of this year with just one 25-basis-point rate cut outlined in the latest FOMC projections.
Before you begin to browse homes, you should start the mortgage preapproval process. Having a mortgage preapproval letter gives you an idea of how much house you can afford and lets sellers know you’re a serious buyer. Some sellers only work with preapproved buyers, plus preapproval allows you to make an offer as soon as you find a place you love.
Getting preapproved for a mortgage also allows you to compare your estimated mortgage rate across multiple lenders before you formally apply. Here’s how the mortgage preapproval process works:
- Check and improve your credit.
- Apply with a few lenders to allow for comparison shopping.
- Review your mortgage preapproval letters, which can be used to leverage your home purchase offer.
Keep in mind that the terms of your mortgage aren’t official until you formally apply for the loan. For example, mortgage rates can fluctuate widely, so you’ll want to formally apply and lock in a mortgage rate once you’ve chosen a lender.
The mortgage process looks different depending on whether you are purchasing or refinancing a home. Here are some of the basic steps involved in getting a mortgage to buy a house:
- Apply for the mortgage.
- Review your loan estimate.
- Lock in your mortgage rate.
- Purchase discount points, if any.
- Schedule a home inspection.
- Pay for a home appraisal.
- Purchase homeowners insurance.
- Budget time for mortgage processing.
- Review the closing disclosure.
- Close on the loan.
The minimum credit score you need can vary by lender and loan program. For a conventional loan, you typically need at least a 620. FHA loans accept credit scores as low as 500 with a 10% down payment or 580 with a 3.5% down payment.
You will find plenty of mortgage options if a down payment has been a roadblock to homeownership. Note that you will usually need to pay private mortgage insurance with less than 20% down, however.
No-down-payment mortgages: Try certain government-backed loans. You may qualify for a no-down-payment VA loan or USDA loan, which do not charge PMI.
Low down-payment mortgages: Put down 3% for some conventional loans and 3.5% for FHA loans if you have at least a fair credit score on the FICO scale. FHA loans require you to carry mortgage insurance, and conventional loans require it if your down payment is low.
It is possible to buy a house in cash, although, the vast majority of buyers need to finance their home purchase, according to the National Association of Realtors. If you don’t want to commit to a home loan, or if you simply can’t qualify for a mortgage, you have limited options:
- Ask for a loan from a family member. Make sure the terms of the loan are clear and in writing. Keep in mind that borrowing money from a loved one can strain your relationship, however.
- Look into seller financing. The seller acts as the lender in this type of real estate agreement. Seller financing could mean lower closing costs and flexible terms. On the other hand, sellers offer fewer buyer protections and may charge higher interest rates compared with traditional lenders.
- Rent to own. A portion of your monthly rent is credited toward the purchase of the home at the end of the lease. If you change your mind, you will lose the extra rent money and any fee you paid that secures your right to buy the home.
