If you're planning to buy a home, you'll likely need a mortgage. It will probably be the biggest loan you've ever had—and getting the wrong one can cost you for years. This article explains the different types of mortgages and how to choose among them. Our best mortgage rates tables, which are updated on a daily basis, ca🏅n then help you zero in on✤ the right lender.

Examples of Mortgage Rates

How much a mortgage will cost you starts with the interest rate you'll be charged. Knowing the going rates on different types of mortgages will help you figure out how much you'll be able to borrow—and how expensive a home you can afford to buy.

A 澳洲幸运5开奖号码历史查询:mortgage calculator can assist with the math.

The mortgage rates below were collected online from major banks in early October 2023 and are shown here for illustration purposes only. For the latest loan rates, see Investopedia's 澳洲幸运5开奖号码历史查询:best mortgage rates tables. "Rate" in the table b🤪elow refers to the basic interest rate on the loan, while "APꦡR" is its annual percentage rate including any fees or other charges. APR is a more accurate representation of what you can actually expect to pay and is the number you should focus on.

30-Year Mortgage Rate Example

15-Year Mortgage Rate Example

Adjustable Rate Mortgage (ARM) Example

Fixed vs. Adjustable Mortgages

Mortgages come in two bas𒈔ic types: fixed rate and adjustable. Each💖 has its pros and cons, depending on your situation.

澳洲幸运5开奖号码历史查询:Fixed-rate mortgages are what they sound like. Their interest rate is fixed for the life of the loan, which might, for example, be 15 or 30 years. The advantage of a fixed-rate loan is its predictability: you won't be hit with a higher rate if interest rates rise. Fixed-rate mortgages are often a good choice for people who are buying a home that they intend to live in for many years to come. The disadvantage of fixed-rate mortgages, on the other hand, is that they typically char🌞ge a higher int🦩erest rate, at least at the beginning, than their adjustable-rate counterparts.

澳洲幸运5开奖号码历史查询:Adjustable-rate mortgages (ARMs) generally have a very attractive introductory rate. But after a specified time, the rate can change 澳洲幸运5开奖号码历史查询:according to the terms of the loan. In the examples above, the rate will stay fixed for 10, seven, or five years, after which it will adjust every six months. (ARMs ar꧃e available with many other lengths a♋nd adjustment intervals.)

Each ARM is tied to a particular 澳洲幸运5开奖号码历史查询:benchmark index, such as the 澳洲幸运5开奖号码历史查询:Secured Overnight Financing Rate (SOFR𝕴). For example, if the index rises to 7% and the lender adds a margin of 3%, your interest rate could rise to 10%. Conversely, if the index fell, your interest rate would, as well.

The danger with an ARM is that if interest rates shoot up substantially by the time the mortgage begins to adjust, the homeowner could be subjected to a large and possibly unaffordable increase in their monthly payment—although 澳洲幸运5开奖号码历史查询:annual and lifetime caps on rate increases provide some protection on loans that have them. For that reason, ARMs c💟an be best suited to people who expect ꦰto move within a certain number of years, before the initial rate elapses.

Note that choosing between a fixed and adjustable-rate mortgage isn't a lifetime decision. You can 澳洲幸运5开奖号码历史查询:refinance either type into the other type, or into the same t🤡ype, if interest rates fall and you can better a better deal.

Other 𓄧Factors That Can Affect Your Mortgage Rate

In addition to whether you choose a fixed or adjustable loan, a number of other factors can affect your mo🌌rtgage rate. Among them:

The lender and loan program. Mortgage rates will vary from lender to lender even on the very same type of loan, so it pays to shop around. In addition, different loan programs can have different rates and any one lender may participate in several programs, giving you multiple opt🦩ions.

澳洲幸运5开奖号码历史查询:Conforming loans are the most widely available option. They are issued by banks and other lenders but usually purchased by 澳洲幸运5开奖号码历史查询:Freddie Mac or Fannie Mae, two government-sponsored companies that buy loans and bundle them into 澳洲幸运5开奖号码历史查询:mortgage-backed securities for sale to investors. Conforming loans tend to have 澳洲幸运5开奖号码历史查询:lower interest rates than 澳洲幸运5开奖号码历史查询:nonconforming loans, such as 澳洲幸运5开奖号码历史查询:jumbo loans.

Banks and other lenders can also offer government-guaranteed loans, such as 澳洲幸运5开奖号码历史查询:FHA loans insured by the Federal Housing Administration, 澳洲幸运5开奖号码历史查询:USDA loans insured by the U.S. Department of Agriculture (USDA), and VA loans insured by the Department of Veterans Affairs. If you qualify for one of these program🐼s you may get a better rate than you'd be eligible for on a regular mortgage, as well as a lower required down payment.

Your credit. Lenders often offer better rates to borrowers with solid credit histories and high credit scores. For that reason, it makes sense to check your 澳洲幸运5开奖号码历史查询:credit score and 澳洲幸运5开奖号码历史查询:credit reports before you apply so you know where you stand. If possible, do what you can to improve your credit score in the meantime, such as keeping your 澳洲幸运5开奖号码历史查询:credit utilization ratio low and correcting any damaging e🦹rrors you find in your credit repor🎉ts.

How much you put down. The higher your 澳洲幸运5开奖号码历史查询:down payment, the better an interest rate lenders may offer you. That's because they'll face less risk. Making as large a down payment as you can afford has some other advantages, as well. For one thing, you'll be borrowing less money, reducing how much you'll owe in interest over the life of the loan. For another, down payments of less than 20% often mean that you'll have to pay for 澳洲幸运5开奖号码历史查询:private mortgage insurance (PMI) each month until your equity in the home reaches 20%.

Whether you pay points. Many lenders will charge you a lower interest rate if you pay them points, sometimes called discount points, upfront. Each point equals 1% of the mortgage amount—$1,000 on a $100,000 mortgage, for example. If you have the cash available, points can be a way to reduce your monthly loan payments as well as how much interest you'll pay in total over the life of the loan.

The Bottom Line

Interest rates on mortgages can vary widely, depending on the lender, the type of loan, and other factors. Once you've decided on the type of loan that's right for you, shop around for the best interest rates and other terms. And if your situation changes in the future, remember that you may be able to refinance into a different loan that's a better fit.