The average mortgage interest rate by state, credit score, year, and loan type

The average interest rate for the most popular 30-year fixed mortgage is 3.1%, according to data from S&P Global.

Mortgage interest rates are always changing, and there are a lot of factors that can sway your interest rate. While some of them are personal factors you have control over, and some aren’t, it’s important to know what your interest rate could look like as you start the process of getting a home loan. 

What are today’s mortgage rates?

Although mortgage rates fluctuate daily, 2020 and 2021 were years of record lows for mortgage and refinance rates across the US.

While low average mortgage and refinance rates are a promising sign for a more affordable loan, remember that they’re never a guarantee of the rate a lender will offer you. Mortgage rates vary by borrower, based on factors like your credit, loan type, and down payment. To get the best rate for you, you’ll want to gather rates from multiple lenders.

Average mortgage interest rate by type

There are several different types of mortgages available, and they generally differ by the loan’s length in years, and whether the interest rate is fixed or adjustable. There are three main types:

  • 30-year fixed rate mortgage: The most popular type of mortgage, this home loan makes for low monthly payments by spreading the amount over 30 years. 
  • 15-year fixed rate mortgage: Interest rates and payments won’t change on this type of loan, but it has higher monthly payments since payments are spread over 15 years. 
  • 5/1-year adjustable rate mortgage: Also called a 5/1 ARM, this mortgage has fixed rates for five years, then has an adjustable rate after that.

Here’s how these three types of mortgage interest rates stack up:

Mortgage type 30-year fixed rate mortgage: Average APR
30-year fixed mortgage 3.16%
15-year fixed mortgage 2.51%
5/1-year adjustable rate mortgage 3.02%

Learn more and get offers from multiple lenders »

Average mortgage interest rate by credit score

National rates aren’t the only thing that can sway your mortgage rates — personal information like your credit history also can affect the price you’ll pay to borrow. 

Your credit score is a number calculated based on your borrowing, credit use, and repayment history, and the score you receive between 300 and 850 acts like a grade point average for how you use credit. You can check your credit score online for free. The higher your score is, the less you’ll pay to borrow money. Generally, 620 is the minimum credit score needed to buy a house, with some exceptions for government-backed loans.

Data from credit scoring company FICO shows that the lower your credit score, the more you’ll pay for credit. Here’s the average interest rate by credit level for a 30-year fixed-rate mortgage of $300,000:

FICO Score National average mortgage APR

620 to 639


640 to 659


660 to 679


680 to 699


700 to 759


760 to 850


Check your rates now and get offers from refinance lenders »

According to FICO, only people with credit scores above 660 will truly see interest rates around the national average.  

Average mortgage interest rate by year

Mortgage rates are constantly in flux, largely affected by what’s happening in the greater economy. Generally, mortgage interest rates move independently and in advance of the federal funds rate, or the amount banks pay to borrow. Things like inflation, the bond market, and the overall housing market conditions can affect the rate you’ll see. 

Here’s how the average mortgage interest rate has changed over time, according to data from the Federal Reserve Board of St. Louis:

Year Average 30-year fixed mortgage rate (January)
2000 8.15%
2001 7.07%
2002 7.14%
2003 5.85%
2004 5.87%
2005 5.77%
2006 6.15%
2007 6.18%
2008 6.07%
2009 6.01%
2010 5.09%
2011 4.77%
2012 3.87%
2013 3.34%
2014 4.53%
2015 3.73%
2016 3.97%
2017 4.20%
2018 3.99%
2019 4.75%
2020 3.72%
2021 2.79%

Throughout 2020, the average mortgage rate fell drastically due to the economic impact of the coronavirus crisis. Rates throughout 2020 and into 2021 were lower than rates at the depths of the Great Recession. Thirty-year fixed mortgage interest rates hit a low of 3.31% in November 2012, according to data from the Federal Reserve of St. Louis.

Average mortgage interest rate by state

The state where you’re buying your home could influence your interest rate. Here’s the average interest rate by loan type in each state according to data from S&P Global

State 15-Year Fixed 30-Year Fixed 5/1 ARM
Alabama 2.57% 3.18% 3.2%
Alaska 2.5% 3.17% 3.59%
Arizona 2.37% 3.09% 2.6%
Arkansas 2.52% 3.04% 3.41%
California 2.43% 3.13% 2.69%
Colorado 2.54% 3.22% 2.85%
Connecticut 2.44% 3.14% 2.87%
Delaware 2.48% 3.17% 2.99%
District of Columbia 2.35% 3.07% 2.99%
Florida 2.43% 3.17% 3.09%
Georgia 2.5% 3.19% 3.28%
Hawaii 2.35% 2.99% 2.37%
Idaho 2.46% 3.13% 2.64%
Illinois 2.54% 3.22% 3.21%
Indiana 2.56% 3.2% 3.04%
Iowa 2.49% 3.13% 2.99%
Kansas 2.57% 3.21% 3.02%
Kentucky 2.64% 3.27% 3.39%
Louisiana 2.65% 3.17% 3.58%
Maine 2.69% 3.33% 3.29%
Maryland 2.38% 3.09% 2.92%
Massachusetts 2.47% 3.15% 2.73%
Michigan 2.48% 3.14% 3.28%
Minnesota 2.54% 3.21% 2.83%
Mississippi 2.78% 3.22% 2.61%
Missouri 2.57% 3.2% 3.25%
Montana 2.54% 3.12% 3.33%
Nebraska 2.72% 3.3% 3.75%
Nevada 2.46% 3.19% 2.52%
New Hampshire 2.52% 3.24% 2.87%
New Jersey 2.38% 3.07% 2.64%
New Mexico 2.56% 3.16% 2.88%
New York 2.48% 3.13% 2.86%
North Carolina 2.54% 3.12% 3.22%
North Dakota 2.47% 3.13% 2.72%
Ohio 2.51% 3.19% 3.2%
Oklahoma 2.61% 3.22% 3.36%
Oregon 2.42% 3.14% 2.81%
Pennsylvania 2.59% 3.23% 3.08%
Rhode Island 2.45% 3.17% 2.74%
South Carolina 2.44% 3.08% 3.15%
South Dakota 2.52% 3.08% 3.61%
Tennessee 2.56% 3.14% 3.48%
Texas 2.5% 3.09% 3.01%
Utah 2.38% 3.03% 2.55%
Vermont 2.55% 3.2% 2.64%
Virginia 2.57% 3.11% 3%
Washington 2.49% 3.15% 2.67%
West Virginia 2.83% 3.36% 3.24%
Wisconsin 2.53% 3.21% 3.02%
Wyoming 2.7% 3.32% 2.93%

What to know before getting a mortgage

What is a mortgage?

A mortgage is a type of secured loan provided by a financial institution to cover the cost of buying a home should you not have enough cash to pay for it upfront. You pay back the lender over an agreed-upon amount of time, including an additional interest payment, which you can consider the price of borrowing money. 

Because a mortgage is a secured loan, it means you put your property up as collateral. Should you fail to make your payments over time, the lender can foreclose on, or repossess, your property. Learn more about how a mortgage works here.

How much can I borrow for a mortgage?

How much you can borrow for a mortgage varies by person, and depends on your financial situation: your credit, your income, and the amount of cash you have available for a down payment. The general rule of thumb for a conforming mortgage (the type most people get, backed by a private company instead of the government) is a 20% down payment. On a $400,000 home, that would mean you need $80,000 up front.

Note that this calculation may be different if you qualify for a different type of mortgage like an FHA or VA loan, which require smaller down payments, or if you’re looking for a “jumbo loan” over $647,200 in most parts of the US in 2022 (excepting Alaska, Hawaii, Guam, and the US Virgin Islands).

You don’t have to go with the first bank to offer you a mortgage. Like anything else, different servicers offer different fees, closing costs, and products, so you’ll want to get a few estimates before deciding where to get your mortgage.

What is a mortgage rate?

A mortgage rate, also known as an interest rate, is the fee charged by your lender for loaning you money. Your principal (payments on the amount of money you borrowed) and interest are rolled into one payment each month.

What is the difference between APR and interest rate?

The mortgage APR is the interest rate plus the costs of things like discount points and fees. This number is higher than the interest rate and is a more accurate representation of what you’ll actually pay on your mortgage annually.

Why is it important to understand the difference between the interest rate and APR? When you’re shopping around for lenders, you may find that one charges a lower interest rate, so you think that company is the obvious choice. But you might actually find out the APR is higher than what you can get with another lender because it charges hefty fees. In reality, it might not be the best deal.

What is a good mortgage interest rate?

In general, you can consider a good mortgage rate to be the average rate in your state or below. This will vary depending on your credit score — better scores tend to get better mortgage rates. Overall, a good mortgage rate will vary from person to person, depending on their financial situation. In 2020, the US saw record-low mortgage rates across the board that continued into 2021. It’s likely that rates will gradually increase in 2022, though.

What is a discount point?

A discount point is a fee you can choose to pay at closing for a lower interest rate on your mortgage. One discount point usually costs 1% of your mortgage, and it reduces your rate by 0.25%. So if your rate on a $200,000 mortgage is 3.5% and you pay $4,000 for two discount points, your new interest rate is 3%.

How do I get a mortgage?

To get a mortgage, you need to start by getting your finances in order. Having a strong financial profile will a) increase your chances of being approved for a loan, and b) help you score a lower interest rate. Here are some steps you can take to beef up your finances:

  • Figure out how much home you can affordThe general rule of thumb is that your monthly home expenses should be 28% or less of your gross monthly income.
  • Find out what credit score you needEach type of mortgage requires a different credit score, and requirements can vary by lender. You’ll probably need a score of at least 620 for a conventional mortgage. You can increase your score by making payments on time, paying down debt, and letting your credit age.
  • Save for a down payment. Depending on which type of mortgage you get, you may need as much as 20% for a down payment. Putting down even more could land you a better interest rate.
  • Check your debt-to-income ratio. Your DTI ratio is the amount you pay toward debts each month, divided by your gross monthly income. Many lenders want to see a DTI ratio of 36% or less, but it depends on which type of mortgage you get. To lower your ratio, pay down debt or consider ways to increase your income.

Then, it’s time to shop around and get quotes from multiple lenders before deciding which one to use. 

How do I compare current mortgage rates?

Because mortgage rates are so individual to the borrower, the best way to find the rates available to you is to get quotes from multiple lenders. If you’re early in the homebuying process, apply for prequalification and/or preapproval with several lenders to compare and contrast what they’re offering.

If you want a broader idea without yet talking to lenders directly, you can use the tool below to get a general sense of the rates that might be available to you.

Read the original article on Business Insider

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