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Current mortgage and refinance rates
|30-year fixed-rate FHA||2.250%||2.984%|
|30-year fixed-rate VA||2.513%||2.804%|
Mortgage rate trends (APR)
NerdWallet’s mortgage rate insight
On Sunday, December 19th, 2021, the average APR on a 30-year fixed-rate mortgage rose 6 basis points to 3.066%. The average APR on a 15-year fixed-rate mortgage rose 2 basis points to 2.280% and the average APR for a 5/1 adjustable-rate mortgage (ARM) rose 12 basis points to 2.902%, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is 1 basis point lower than one week ago and 26 basis points higher than one year ago.
A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR.
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For today, December 19th, 2021, the current average mortgage rate on the 30-year fixed-rate mortgage is 3.066%, the average rate for the 15-year fixed-rate mortgage is 2.28%, and the average rate on the 5/1 adjustable-rate mortgage (ARM) is 2.902%. Rates are quoted as annual percentage rate (APR).
The more lenders you check out when shopping for mortgage rates, the more likely you are to get a lower interest rate. Getting a lower interest rate could save you hundreds of dollars over a year of mortgage payments — and thousands of dollars over the life of the mortgage.
With NerdWallet's easy-to-use mortgage rate tool, you can compare current home loan interest rates — whether you're a first-time home buyer looking at 30-year fixed mortgage rates or a longtime homeowner comparing refinance mortgage rates.
NerdWallet's mortgage rate tool can help you find competitive mortgage rates. Specify the property's ZIP code and indicate whether you're buying or refinancing. After clicking "Get Started," you'll be asked the home's price or value, the size of the down payment or current loan balance, and the range of your credit score. You'll be on your way to getting a personalized rate quote, without providing personal information. From there, you can start the process to get preapproved with a lender for your home loan. It's that easy.
A mortgage is a loan to buy a home. When you borrow the money, you promise to repay the loan at an agreed-upon interest rate. That's the all-important mortgage rate borrowers are so interested in. It's just one factor, and no doubt the most important to consider, when you are trying to determine how much a loan will cost you. To borrow the money, the lender will charge you a fee, expressed as an interest rate assessed for the life of the loan.
A mortgage is set up so you pay off the loan over a specified period called the term. The most popular term is 30 years. Each payment includes a combination of principal and interest.
Typically, each monthly payment includes about one-twelfth of the annual cost of property taxes and homeowners insurance. The lender often collects this money in an escrow account, and may even pay the taxes and insurance when they're due.
At a high level, mortgage rates are determined by economic forces that influence the bond market. You can't do anything about that, but it's worth knowing: bad economic or global political worries can move mortgage rates lower. Good news can push rates higher.
What you can control are the amount of your down payment and your credit score. Lenders fine-tune their base interest rate on the risk they perceive to be taking with an individual loan.
So their base mortgage rate, computed with a profit margin aligned with the bond market, is adjusted higher or lower for each loan they offer. Higher mortgage rates for higher risk; lower rates for less perceived risk.
So the bigger your down payment and the higher your credit score, generally the lower your mortgage rate.
» MORE: Get your credit score for free
The Federal Reserve doesn’t set mortgage rates, but it does affect mortgage rates indirectly. The Federal Reserve is the nation’s central bank. It guides the economy with the twin goals of encouraging job growth while keeping inflation under control. Decisions made by the Federal Open Market Committee to raise or cut short-term interest rates can sometimes cause lenders to raise or cut mortgage rates.
Mortgage rates published on lender websites and advertised online can set unrealistic expectations for the interest rate you'll really earn. How do you know you have a good mortgage rate?
Once you know what kind of home loan will work best for you, it will be time to compare three or more lenders to determine the right mortgage rate offer for you. With a Loan Estimate from each lender compared side-by-side, you'll be able to see which lender is giving you a good mortgage rate combined with the lowest origination fees.
The interest rate is the percentage that the lender charges for borrowing the money. The APR, or annual percentage rate, is supposed to reflect a more accurate cost of borrowing. The APR calculation includes fees and discount points, along with the interest rate.
APR is a tool used to compare loan offers, even if they have different interest rates, fees and discount points.
A major component of APR is mortgage insurance — a policy that protects the lender from losing money if you default on the mortgage. You, the borrower, pay for it.
Lenders usually require mortgage insurance on loans with less than 20% down payment (in a home purchase) or less than 20% equity (in a refinance). There are two main types of mortgage insurance:
Private mortgage insurance, or PMI: The cost of PMI varies, depending on loan size, amount of down payment or equity, credit score and type of loan. Typically, the annual cost ranges from 0.55% to 2.25% of the loan amount. You may be able to cancel private mortgage insurance after you reach 20% equity.
FHA mortgage insurance: When you get a mortgage insured by the FHA, you pay an upfront fee of 1.75% of the loan amount, plus monthly premiums that vary from 0.45% to 1.05% of the loan amount per year. The monthly premiums depend on the loan amount, size of down payment and the term. FHA premiums don't vary by credit score, while PMI premiums do. For most borrowers, FHA mortgage insurance can't be canceled; you get rid of it by refinancing to a conventional loan.
In lieu of mortgage insurance, VA loans include a funding fee and USDA loans require an upfront loan guarantee fee, plus an annual fee.
Home loans come in variations of these categories, and mortgage rates can vary by loan type:
Government-backed vs. conventional
Government-backed loans consist of mortgages insured by the Federal Housing Administration (FHA loans) and mortgages guaranteed by the Department of Veterans Affairs (VA loans) and the Department of Agriculture (USDA loans). These loans have lenient qualification criteria and are attractive to first-time home buyers.
While these programs have foundations of low mortgage rates, lenders may adjust the rates higher because of the risk they feel is inherent in low- or no-down-payment loans.
Conventional mortgages tend to be plain-vanilla home loans that meet qualifications set by mortgage giants Fannie Mae and Freddie Mac. They typically have higher minimum credit scores than government-backed loans.
Mortgage rates for these loans can be favorable because lenders generally believe they are lending to lower-risk borrowers.
Fixed-rate vs. adjustable-rate mortgage:
A fixed-rate loan has one interest rate over the life of the mortgage, so that the monthly principal-and-interest payments remain the same until the loan is paid off. An adjustable-rate mortgage, or ARM, has an interest rate that can go up or down periodically. ARMs typically start out with a low interest rate for the first few years, but that rate can go higher.
» MORE: Compare fixed-rate loans to ARMs
30-year vs. other terms
The term is the number of years it will take to pay off the mortgage. The most common mortgage term is 30 years. Another option is the 15-year term, which is popular for refinancing.A 30-year mortgage has smaller monthly payments than a 15-year loan, making it more affordable. But over the loan's life, you pay more interest on a 30-year term than a 15-year term because you're making twice as many payments.
Shorter-term mortgages generally have lower mortgage rates than long-term loans.
Borrowers may choose other terms, such as 20 or 10 years.
Conforming vs. jumbo loans
There is a limit on the size of a loan that Fannie Mae and Freddie Mac will back. It's called the conforming limit because the loan conforms to Fannie and Freddie requirements. The conforming limit varies by county and may be adjusted annually.
A jumbo loan is a mortgage for more than the conforming limit. The lending criteria tend to be stricter for jumbo loans: They often require higher minimum credit scores, down payments and debt-to-income ratios than conforming loans. Again, lender risk drives your mortgage rate here.
» MORE: This year's jumbo loan limits
The lender may allow you to pay discount points: fees to reduce the interest rate on the mortgage. One discount point costs 1% of the loan amount.
This is an optional fee. A lender may add them to a loan offer to make their interest rate seem more competitive. It's up to you to decide if paying an additional upfront charge is worth it.
Typically, one discount point cuts the interest rate by 0.25%, but depending on circumstances, it might reduce the rate less or more than that. You may be able to buy more or less than one point. And of course, you can opt to pay none.
» MORE: Mortgage points calculator
Mortgage rates not only vary from day to day, but hour to hour. You don't want the rate to skyrocket right before closing, so at some point, you lock the rate. A mortgage rate lock is the lender's guarantee that you'll pay the agreed-upon interest rate if you close by a certain date. Your locked rate won't change, no matter what happens to interest rates in the meantime.
It's a good idea to lock the rate when you're approved for a mortgage with an interest rate that you're comfortable with. Consult with your loan officer on the timing of the rate lock. Ideally, your rate lock would extend a few days after the expected closing date, so you'll get the agreed-upon rate even if the closing is delayed a few days.
NerdWallet's How Much Can I Borrow? calculator takes your financial information and recommends the maximum amount you should borrow. It also tells you the maximum size of the loan you might qualify for.
When you apply, lenders calculate your debt-to-income ratio, which is the percentage of monthly income that goes toward paying debt. Most lenders prefer a DTI of 36% or less.
Finding the right mortgage deal for you isn't only about finding the lowest interest rate. Mortgage companies charge fees, too. The best deal involves finding the right combination of interest rate and fees for you, and knowing how to compare offers so you can choose the right one for your situation.
You can start with this guide to finding the best combination of rate and fees.
As noted above, you're not looking for the lowest mortgage rate. Instead, you're looking for the right combination of mortgage rate and closing costs for you — and good customer service matters, too.
Your current financial situation and your plans for the future are unique, so the best mortgage lender for your neighbor might differ from the best lender for you. Your best bet is to get your finances in shape, know your financial goals, and compare mortgage deals from multiple lenders.
The impact of a 0.25% change in the interest rate depends on the loan amount, the term and the interest rates. To illustrate, let's look at a $250,000 mortgage with a 30-year term, and the differences in payment between an interest rate of 4% and a rate of 4.25%.
At 4%, the monthly principal and interest cost $1,193.54. At 4.25%, the monthly principal and interest cost $1,229.85. So, for a $250,000 mortgage with a 30-year term, cutting the interest rate from 4.25% to 4% saves $36.31 a month and $436 a year.
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