A good mortgage interest rate is one at or below the current market average for your loan type, credit tier, down payment, and term. It only counts as good once you see the full cost of the loan beside other offers. A rate that looks low can come with thousands in discount points, and a slightly higher rate can cost less over the years you actually keep the loan.
This article covers how to benchmark a quote against published averages, which factors move your number, and how to compare offers by total cost instead of rate alone. Throughout, I use the same test: put every offer on the same footing, then do the arithmetic.
By Duane Buziak, NMLS #1110647
A Rate Is Only Good Against a Benchmark: Two Offers Side by Side
Suppose a borrower buys a home with a $400,000 , 30-year fixed loan and gets two offers. These are illustrations with round assumptions, not a client result.
- Offer A: 6.00% with 1.5 discount points ($6,000 upfront).
- Offer B: 6.375% with little to nothing out of pocket at closing for the rate itself.
Monthly principal and interest comes from P = L × r ÷ (1 − (1 + r)^−n), where r is the monthly rate and n is 360 payments. Offer A works out to $2,398.20. Offer B works out to $2,495.48. The gap is $97.28 a month.
- Year 5 (60 payments): Offer A costs $6,000 + (60 × $2,398.20) = $149,892. Offer B costs 60 × $2,495.48 = $149,729. Offer B is about $163 cheaper.
- Year 7 (84 payments): Offer A costs $6,000 + (84 × $2,398.20) = $207,449. Offer B costs 84 × $2,495.48 = $209,620. Offer A is about $2,172 cheaper.
Break-even is $6,000 ÷ $97.28, or about 62 months. Sell or refinance before that and the lower rate was the more expensive loan. This comparison counts payments and points only. It ignores the slightly faster principal paydown on Offer A, which would favor A a little more.
The benchmark
Freddie Mac publishes the weekly Primary Mortgage Market Survey (PMMS). Compare your quote to the average for the same product, and read the date on it. I do not quote a figure here because it changes every week; use the number shown as of the day you read this. PMMS reflects strong-credit conventional borrowers and specific points assumptions, so a government-backed loan, a lower score, or a small down payment will not match it exactly.
Terms worth separating
- Interest rate: the cost of borrowing the principal.
- APR: the rate plus certain lender charges, expressed yearly. The CFPB explains the difference.
- Discount points: prepaid interest, each typically 1% of the loan, that buys a lower rate. See the CFPB guidance on points.
- Par rate: the rate at which you pay no points and receive no lender credit.
What Moves Your Rate: Credit, Down Payment, Loan Type, and Term
Pricing is built from several levers. In rough order of impact for most borrowers:
- Credit score tier. Pricing steps down at score bands, so a few points can matter at a boundary.
- Loan-to-value (LTV). More down payment means less risk to the investor and usually better pricing.
- Loan type. Conventional, FHA, VA, USDA, jumbo, and DSCR or other non-QM loans each price off different markets.
- Term. A 15-year loan generally carries a lower rate than a 30-year, with a much higher payment.
- Occupancy. Primary residences price better than second homes and investment properties.
- Lock period. Longer locks usually cost slightly more.
For conventional loans, Fannie Mae publishes the Loan-Level Price Adjustment (LLPA) matrix, which shows how credit score and LTV adjust pricing. The matrix is revised from time to time, so check the current version rather than relying on a screenshot.
How a small gap compounds
Take a $400,000 loan at 6.0% versus 6.5%. Payments are $2,398.20 and $2,528.27, a difference of $130.07 a month. Multiply: $130.07 × 12 = $1,560.84 a year, about $10,926 over 7 years, and about $46,825 across a full 30-year term. Half a point is not cosmetic.
What “as low as” really means
An advertised rate usually assumes an ideal borrower, a large down payment, and often discount points. It tells you very little about your own number. Ask instead for a Loan Estimate built on your actual scenario: your credit tier, your price and down payment, your property type, and a stated lock period. Only that document lets you test whether a rate is good.
Why Rates Differ Between Lenders and How Brokers Shop Them
A retail lender prices from its own rate sheet. That can be competitive, and some borrowers value the single point of contact. A broker works differently: Duane Buziak prices a scenario across hundreds of wholesale lenders, then shows the options side by side. Neither model is wrong, but one shows you one shelf and the other shows you many. That is the idea behind “Don’t Guess Your Rate. Shop It.” (If you are in South Carolina, note that my licensing there is broker-only.)
Getting quotes you can actually compare
Every Loan Estimate you collect should share the same inputs:
- Loan amount and loan type
- Lock period
- Number of points or credits
- Credit tier and occupancy
Change one input and the comparison stops being meaningful. Then compare the rate, the APR, and the cash to close together.
Shopping and your credit
The CFPB advises that multiple mortgage inquiries within a short window are generally counted as a single inquiry for scoring purposes, and that the window depends on the scoring model. Check the current CFPB wording before you set a schedule, and keep your quotes close together.
You can also start without a hard pull. A soft credit pull mortgage review lets a broker estimate a realistic rate range with no impact on your score. You move to a hard inquiry only when you are ready to lock a specific loan.
Duane Buziak’s Total Cost of Ownership Worksheet: Rate Is Only One Line
The payment you actually make includes more than principal and interest. This worksheet uses a purchase in Cobb County, Georgia, as the locality. The tax line is a placeholder: I assumed a 1.00% effective rate for arithmetic only. Replace it with the current millage and assessment from the Cobb County Board of Tax Assessors before relying on any total. Insurance, PMI, and HOA figures are also round assumptions.
Assumptions: $450,000 price, 10% down ($45,000), $405,000 loan, 6.25% fixed for 30 years.
| Line item | Arithmetic | Monthly |
|---|---|---|
| Principal and interest | 4.05 × $615.72 per $100,000 | $2,493.67 |
| Property tax (assumed 1.00%) | $450,000 × 0.01 ÷ 12 | $375.00 |
| Homeowners insurance | $1,800 ÷ 12 | $150.00 |
| PMI (assumed 0.50%) | $405,000 × 0.005 ÷ 12 | $168.75 |
| HOA (assumed) | $50 × 1 | $50.00 |
| Total | Sum of lines above | $3,237.42 |
Principal and interest is under 77% of the payment. Two offers with identical rates can still land on different totals if their mortgage insurance or escrow assumptions differ.
When the PMI line disappears
This loan starts at 90% LTV ($405,000 ÷ $450,000). Under the Homeowners Protection Act, as the CFPB describes, you can request cancellation when the balance reaches 80% of the original value, and servicers must terminate it automatically at 78% if you are current.
- 80% of $450,000: $360,000. On this schedule the balance gets there at roughly month 92.
- 78% of $450,000: $351,000. Automatic termination arrives around month 106.
Requesting at 80% saves about 14 months of PMI, or roughly $2,360 ($168.75 × 14). Servicers may require a good payment history and no subordinate liens, so confirm your servicer’s current rules. Extra principal payments pull the date forward.
Comparison Table: How a Good Rate Looks Across Loan Programs
I have left actual rates out on purpose. Use the PMMS for a dated conventional benchmark, and get a Loan Estimate for everything else.
| Feature | 30-year conventional | FHA | VA | 15-year conventional |
|---|---|---|---|---|
| Typical minimum down payment | As low as 3% on some programs | 3.5% with qualifying credit | Often none for eligible borrowers | As low as 3% on some programs |
| Credit flexibility | Pricing tightens as scores drop | More flexible score requirements | Flexible, set by lender overlays | Same as 30-year conventional |
| Mortgage insurance or fee | PMI if under 20% down | Upfront and annual MIP | VA funding fee, unless exempt | PMI if under 20% down |
| Rate relative to 30-year conventional | Baseline | Often comparable or slightly lower | Often comparable or slightly lower | Usually lower |
| APR effect | Small gap from rate with few fees | APR rises noticeably from MIP | APR reflects funding fee if financed | Small gap from rate |
| What drives total cost | Credit tier, LTV, points | Length of MIP, loan size | Funding fee, use of entitlement | Higher payment, faster payoff |
Check the current schedules at HUD.gov for FHA premiums and VA.gov for funding fees. Conforming limits come from FHFA. As I understand it, the 2026 baseline one-unit limit is $832,750, but verify it on FHFA’s site, because loans above your county’s limit move into jumbo pricing.
For VA loans, I start by pulling your Certificate of Eligibility electronically with your SSN and date of birth. If you have used entitlement before, second-tier (bonus) entitlement can apply: take the county loan limit × 25% as the maximum guarantee, subtract the entitlement already used, then multiply what remains by 4 for the zero-down purchase limit. A VA cash-out refinance can go to 100% LTV; conventional cash-out tops out at 90%.
When to Lock, Buy Down, or Wait: Deciding Whether Your Rate Is Good Enough
Break-even is the cleanest test for points: cost of points ÷ monthly savings. Using the earlier example, $6,000 ÷ $97.28 gives 61.7 months. If you expect to keep the loan well beyond that, the points pay off. If you might move or refinance sooner, the higher rate with little to nothing out of pocket at closing is the cheaper path.
Waiting for a lower rate and refinancing later is a real strategy, but a refinance carries its own closing costs and resets your term. A rate has to fall far enough to cover those costs within the time you will hold the new loan.
Lock basics
A lock fixes your rate for a set number of days. Longer locks cost more. Some lenders offer a float-down that lets you take a lower rate if the market improves, usually for a fee or a minimum rate drop. If a lock expires before closing, you may be repriced at the current market or pay an extension fee. Nobody can predict where rates will go, so build your decision around a payment you can carry, not a forecast.
What to bring to a comparison
- A current credit snapshot
- Your target monthly payment, all in
- How many years you expect to stay in the home
- How much you are willing to pay upfront for a lower rate
Mortgage Rate FAQ: 10 Questions Answered
What is a good mortgage rate right now?
A good rate is at or below the latest Freddie Mac PMMS average for your loan type and term, adjusted for your credit and down payment. Check freddiemac.com/pmms for the current weekly figure and its date, then compare it with a Loan Estimate built on your own scenario.
What is a good rate with a 700 credit score?
A 700 score usually prices close to, but slightly above, the best conventional tiers. A good rate is within a small margin of the PMMS average for the same product. Down payment, occupancy, and points can move it more than the score alone, so quote your exact scenario.
Is APR or interest rate more important?
Neither alone. The interest rate sets your payment, while APR folds in certain fees so you can compare offers. Use APR for similar loans and a long holding period, and use break-even math when points are involved. Always compare both beside the cash to close.
How many points is worth paying?
Points are worth paying when you keep the loan past the break-even point: points cost divided by monthly savings. In the example above, $6,000 for $97.28 a month breaks even near 62 months. If you may move or refinance sooner, skip them.
What rate do I get with 5% down?
With 5% down you are at 95% LTV, which usually prices slightly above lower-LTV loans and requires PMI. The exact rate depends on credit tier and the Fannie Mae LLPA adjustments. Compare the rate and the PMI cost together, because mortgage insurance can matter as much as the rate.
How often do mortgage rates change?
Rates can change daily and sometimes more than once a day as bond markets move. Freddie Mac publishes a weekly average, but your quote reflects the day’s rate sheet. That is why a lock matters once you choose a loan. Nobody can reliably predict the direction.
Does shopping lenders hurt my credit?
Generally not much. Scoring models treat multiple mortgage inquiries within a short window as one, and the CFPB gives guidance on this. Window length varies by scoring model, so keep your quotes close together. A soft pull mortgage broker review can also give you a range first.
What is a good rate for refinancing?
A good refinance rate is low enough that monthly savings repay the closing costs within the time you will keep the loan. Divide total refinance costs by monthly savings to get break-even months. Cash-out refinances price differently, with conventional capped at 90% LTV and VA at 100%.
What is a good 15-year rate compared with a 30-year?
A 15-year rate is typically lower than a 30-year rate, and PMMS tracks both. The tradeoff is a much higher monthly payment, though total interest is far lower. Judge it by whether you can carry the payment comfortably, not just by the lower rate.
Can I get a mortgage pre approval with no hard inquiry?
Yes, you can start with a no hard inquiry mortgage pre approval that uses a soft pull to estimate your rate range. A hard inquiry is typically needed before a formal underwriting approval. Starting soft lets you compare options with no credit hit before you commit.
A Good Rate Is the Lowest Rate on a Like-for-Like Loan Estimate
Hold the loan type, amount, lock period, and points constant, and the lowest total cost across your expected years in the home is your good rate. Next, read up on how to read a Loan Estimate line by line, which makes comparing offers faster.
Your dream home is within reach. Discover how much you could save with personalized mortgage rates tailored to your unique situation. Securely pre-qualify in minutes with no impact to your credit score and compare competitive offers from trusted lenders who are ready to help you save. To talk it through with Duane Buziak, call 804-212-8663.