Mortgage rates by credit score are not one-size-fits-all.
While a credit score of 740 typically secures the lowest rates, borrowers with moderate credit may still find competitive options through specific loan types.
Remember, your credit score is just one piece of the puzzle. So let’s explore all of your options to make sure you’re getting the lowest rate possible for your credit score.
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Your credit score significantly impacts the interest rate you’ll receive on your mortgage.
This score is a numerical measure of your creditworthiness, based on factors like payment history, total debt, types of credit used, and length of credit history. Higher scores generally lead to lower mortgage rates, as lenders perceive you as a lower-risk borrower.
Credit scores are determined by credit bureaus like Equifax and Experian. Their comprehensive assessment helps lenders evaluate the risk of lending to you.
Mortgage lenders often use “credit tiers” to determine interest rates, which are based on FICO scores. FICO, short for Fair Isaac Corporation, is a widely used credit scoring model. Here’s a breakdown of typical credit tiers and how they affect mortgage rates:
≥ 740: Lowest mortgage rates
It’s important to note that even small differences in your credit score can have a significant impact on your mortgage rate. For example, if your score is 718 or 719, improving it by just a few points could bump you into a higher tier with a lower interest rate. Conversely, if your score drops to a lower tier before closing, you may face a higher mortgage rate.
While your credit tier is an important factor in determining your mortgage rate, other aspects like loan type (conventional, FHA, VA, etc.), down payment size, and property type (single-family home, condo, etc.) also play a role. For instance, FHA loans allow lower credit scores but may have higher interest rates compared to conventional loans for borrowers with good credit.
Mortgage interest rates can vary significantly based on credit scores, leading to substantial differences in monthly mortgage payments and long-term interest costs for homeowners.
FICO, the biggest credit scoring company in American real estate, provides a helpful online calculator that illustrates how much mortgage rates can differ based on credit scores. Here’s an example of how average annual percentage rates (APRs) varied by credit score in mid-2024:
| FICO Score | Mortgage APR* |
| 760-850 | 6.976% |
| 700-759 | 7.198% |
| 680-699 | 7.375% |
| 660-679 | 7.589% |
| 640-659 | 8.019% |
| 620-639 | 8.565% |
*Average APR from myFICO.com is for sample purposes only and based on a 30-year fixed-rate mortgage. Your own interest rate will be different..
According to the Mortgage Bankers Association, the average loan amount for a new single-family home purchase was $405,400 in March of 2024.
We’ll use that loan amount, and the APR estimates from FICO (above), as an example to show how credit tiers impact mortgage payments and long-term interest costs. If you compare the highest and lowest credit score tiers, the borrower with better credit saves about $445 per month and $160,200 in total interest over the life of their mortgage loan.
| FICO Score | Mortgage APR* | Monthly Payment* | Total Interest (30 Years)* |
| 760-850 | 6.976% | $2,691 | $563,360 |
| 700-759 | 7.198% | $2,751 | $584,960 |
| 680-699 | 7.375% | $2,800 | $602,600 |
| 660-679 | 7.589% | $2,859 | $623,840 |
| 640-659 | 8.019% | $2,980 | $667,400 |
| 620-639 | 8.565% | $3,136 | $723,560 |
*Payment examples and APRs sourced from myFICO.com. Payments based on a loan amount of $405,400 and a 30-year fixed-rate mortgage loan. Your own interest rate and monthly payment will be different.
mortgage calculator can help you estimate these costs and compare different loan options.
Conventional loans require private mortgage insurance (PMI) for down payments less than 20% of the home price, while FHA loans have both upfront and annual mortgage insurance premiums (MIP).
The type of loan you choose, such as a fixed-rate or adjustable-rate mortgage (ARM), can also affect your interest rate and long-term costs. Consider your financial situation and goals when selecting a loan for your primary residence.
In addition to credit score, mortgage rates also vary by loan type. Here are some common loan types and their typical rates.
Conventional loans are the most common type of mortgage and typically offer competitive rates for borrowers with good credit. Rates may be slightly higher than for government-backed loans like FHA or VA. Today’s mortgage rate for conventional loans is % ( % APR).
The Federal Housing Administration guarantees FHA loans, which is why they often have lower rates than conventional loans. Today’s mortgage rate for FHA loans is % ( % APR). These loans can be a good option for first-time home buyers with lower credit scores or limited down payment funds.
VA loans are available to eligible military service members, veterans, and their spouses. They often feature lower rates than conventional loans and don’t require a down payment. Today’s mortgage rate for a VA loan is % ( % APR).
USDA loans are designed for rural homebuyers and offer competitive rates for those who qualify. These loans typically require a minimum credit score of 640.
Jumbo loans are mortgages that exceed conforming loan limits set by Fannie Mae and Freddie Mac. Due to the higher loan amount, jumbo loans often have slightly higher rates than conforming loans.
Mortgage rates by credit score are heavily influenced by the Federal Reserve’s adjustments of the federal funds rate. This is the rate banks charge each other for overnight loans.
| Conventional 30-year fixed rate | % ( % APR) |
| Conventional 15-year fixed rate | % ( % APR) |
| FHA 30-year fixed rate | % ( % APR) |
| FHA 15-year fixed rate | % ( % APR) |
| VA 30-year fixed rate | % ( % APR) |
| VA 15-year fixed rate | % ( % APR) |
*Current mortgage rates and annual percentage rates for sample purposes only. See our full list of interest rate assumptions here.
Your credit score has a significant impact on refinance rates, just like it does on purchase mortgage rates. Lenders use your credit score to assess the risk of loaning you money, and this risk assessment determines the interest rate you’re offered.
| FICO Score | Refinance APR* |
| 760-850 | 6.726% |
| 700-759 | 6.948% |
| 680-699 | 7.125% |
| 660-679 | 7.339% |
| 640-659 | 7.769% |
| 620-639 | 8.315% |
*Refinance APR estimates are for sample purposes only and based on a 30-year fixed-rate mortgage refinance. Your actual rate will depend on your personal finances.
Cash-out refinances, which allow homeowners to access their home equity by refinancing their mortgage for a higher amount, typically come with slightly higher interest rates compared to traditional refinances. This is because cash-out refinancing is considered riskier for lenders, as the homeowner is taking on more debt.
Here’s an example of how cash-out refinance rates might look based on credit score tiers:
| FICO Score | Cash-Out Refinance APR* |
| 760-850 | 7.226% |
| 700-759 | 7.448% |
| 680-699 | 7.625% |
| 660-679 | 7.839% |
| 640-659 | 8.269% |
| 620-639 | 8.815% |
*Cash-out refinance APR estimates are for sample purposes only and based on a 30-year fixed-rate mortgage refinance. Your actual rate will depend on your personal finances.
If you’re considering refinancing your mortgage, it’s a good idea to check your credit score and compare rates from multiple lenders. You can use a mortgage calculator to estimate your new monthly payments and see how much you could save by refinancing.
Keep in mind that refinancing involves going through the mortgage application process again, and your credit score will be a key factor in determining your interest rate. If you’re considering a cash-out refinance to tap into your home equity for a short-term expense, like a home renovation, you might face higher rates than you would for a standard rate-and-term refinance.
Some tips for homeowners looking to refinance:
Even if you have a lower credit score, you may still have refinance options. For example, FHA Streamline Refinance and VA Interest Rate Reduction Refinance Loan (IRRRL) programs have more lenient credit requirements than traditional refinances.
Ultimately, understanding how your credit score impacts your refinance rate is key to making an informed decision about whether refinancing is right for you. By taking steps to improve your credit and shopping around for the best rates, you can potentially save thousands of dollars over the life of your mortgage.
Your credit score helps lenders assess the risk of loaning you money. A higher score indicates you’re a lower-risk borrower, which usually translates to a lower interest rate. Conversely, a lower score suggests you’re a higher-risk borrower, so lenders typically charge a higher rate to offset that risk.
Conventional mortgage loans are subject to “risk-based pricing,” which factors your credit score into your rate and fees. The Consumer Financial Protection Bureau (CFPB) defines risk-based pricing as offering different interest rates or loan terms based on the estimated risk that consumers will fail to pay back their loans.
Each lender uses its own process to determine risk, considering factors like credit score, employment status, income, and outstanding debts. Because each lender assesses risk differently, it’s important to shop around and compare personalized quotes to find the best rate for your credit score.
While credit scores are a key component in determining your mortgage rate, there are several other factors that lenders take into account. These elements can significantly influence the rate you’re offered and ultimately affect your monthly payments and the total cost of your mortgage.
The size of your down payment plays a significant role in determining your mortgage rate, as it directly impacts the loan-to-value ratio (LTV). A higher down payment typically means a lower LTV ratio, which reduces the lender’s risk. This can often lead to a lower interest rate for the borrower.
The total amount you borrow can impact your mortgage rate. Larger loan amounts sometimes lead to higher interest rates, as they represent a greater risk to the lender. On the other hand, smaller loan amounts typically carry less risk and might qualify for lower rates.
Your debt-to-income ratio (DTI) compares your total monthly debt payments to your gross monthly income. A lower DTI ratio suggests you have a good balance between debt and income, which can lead to lower mortgage rates.
Buying discount points upfront can lower your mortgage rate. Discount points, also called mortgage points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This can be a way to lower your overall interest costs over the life of the loan.
Closing costs, including origination fees, can influence your mortgage rate. If you choose not to pay these fees upfront and instead roll them into the loan, it can result in a higher interest rate.
Comparison shopping for your mortgage can make a huge difference. The CFPB says failing to comparison shop costs the average homebuyer approximately $300 per year and many thousands over the life of the loan.
To qualify for a mortgage, lenders typically look for a minimum credit score of 620 for conventional loans. However, some loan types, like FHA loans, may accept scores as low as 500 with a larger down payment.
What mortgage rate can I get based on my credit score?The mortgage rate you can get largely depends on your credit score. Generally, a higher credit score means a lower mortgage rate. Those with excellent credit (720 and above) usually secure the best rates, while scores below 640 can lead to significantly higher rates.
How do adjustable rate mortgages affect homeowners with varying credit scores?Adjustable-rate mortgages (ARMs) usually start with lower rates, which benefits home buyers with good credit scores as it saves them money at first. But for people with lower credit scores, these mortgages can end up costing more over time and can be riskier because the rates can change a lot.
Understanding the impact of your credit score on mortgage rates is important, but remember, it’s just one piece of the puzzle.
Along with mortgage rates by credit score, lenders also consider factors like loan type and term length (such as 30 or 15 years), as well as the current state of the market. Even if you have a lower credit score, there are strategies—like obtaining a rate lock—to secure a competitive rate from the best mortgage lenders.
Eager to discover what mortgage rate you qualify for? Consider applying for mortgage pre approval or click the links below to compare rate quotes from multiple lenders, without any commitment.
Authored By: Peter Warden The Mortgage Reports EditorPeter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.
Updated By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Reviewed By: Paul Centopani The Mortgage Reports EditorPaul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.