The mortgage industry is highly competitive, but rates aren't arbitrary. Lenders use math and risk assessment to set them: the lower your perceived risk of default, the better your rate. High risk? Higher rate—or possibly denial.
Published rates are starting points. Lenders then apply adjustments based on your profile—some raise your rate, others lower it. Mastering these factors puts you in control and can save thousands over your loan's life.
Key Factors That Influence Your Mortgage Rate
Here's how common factors affect your rate. Focus on what you can improve for the biggest impact.
| Factor | Better Rate | Higher Rate | Impact |
| Property Type | Single-family home | Condo 2–4 unit multi-family |
Medium |
| Occupancy | Primary residence | Second home Investment property |
High |
| Loan Amount | Conforming (under ~$766,550 in 2025) | Jumbo (above conforming limit) | Medium |
| Credit Score | 740+ | Below 680 | High |
| Down Payment | 20% or more (no PMI) | Less than 20% | High |
| Debt-to-Income Ratio | Under 36% | Over 43% | High |
| Employment & Income Stability | 2+ years same job Steady or increasing income |
Frequent job changes Self-employed without strong documentation |
High |
| Cash Reserves | 6+ months of payments | Little to no reserves | Medium |
| Loan Type & Term | 15-year fixed Conventional with full documentation |
30-year fixed Interest-only or adjustable-rate |
Medium–High |
| Buying Points | Pay points upfront for lower rate | No points | Medium |
| Shopping Lenders | Compare multiple quotes | Accept first offer | Medium |
The best rates go to strong borrowers. Focus on credit, down payment, and stable finances—you'll not only qualify for better terms but save significantly over time. Shop smart and get pre-approved early!