Today's mortgage rates remain at lowest level in over a year for 15- and 30-year terms

Publish date: 2024-06-25

The median interest rate* on a 30-year fixed-rate mortgage is 6.490% as of August 13,  which is unchanged from yesterday. Additionally, the median interest rate on a 15-year fixed-rate mortgage is 5.625%, which is also unchanged from yesterday.

Interest rates held steady at their lowest level in over a year, plummeting last week in response to a weaker jobs report than expected. After more than a year of sky-high interest rates with few rate cuts from the Federal Reserve, the drop provided a welcomed relief. 

In addition, industry experts are anticipating that the Federal Open Market Committee will announce an interest rate cut at its September meeting.

With mortgage rates changing daily, it’s a good idea to check today’s current rate before applying for a loan. It’s also important to compare different lenders’ current interest rates, terms, and fees to ensure you get the best deal. 

Median mortgage interest rates are calculated based on rates from over 500 mortgage lenders in all 50 states. The data collected daily by Credible is based on a $400,000 purchase price, $80,000 down payment, single-family primary residence, and a 740+ FICO score.

When you take out a mortgage loan to purchase a home, you’re borrowing money from a lender. The lender will charge interest on the amount you borrowed to compensate for that risk.

Expressed as a percentage, a mortgage interest rate is the cost of borrowing money. It can vary based on several factors, such as your credit score, debt-to-income ratio (DTI), down payment, loan amount, and repayment term.

When you get a mortgage, you’ll typically receive an amortization schedule, which shows your payment schedule for the life of the loan. It also indicates how much of each payment goes to reduce the principal balance versus the interest.

Keep in mind

A mortgage’s interest rate is not the same as its annual percentage rate (APR) — an APR includes both the interest rate and any other lender fees or charges.

You’ll spend more money on interest and less on the principal balance at the beginning of your loan term. Over time, as the amount you owe decreases, you’ll pay more toward the principal and less toward interest.

Your mortgage interest rate can be either fixed or adjustable. With a fixed-rate mortgage, the rate will be consistent for the duration of the loan. With an adjustable-rate mortgage (ARM), the interest rate can fluctuate with the market.

Mortgage rates change frequently — sometimes on a daily basis — in response to economic factors. Inflation plays a significant role in these fluctuations. Interest rates tend to rise in periods of high inflation, and drop or remain roughly the same in times of low inflation. Other factors, like the economic climate, demand, and inventory can also impact the current average mortgage rates.

Mortgage lenders typically determine the interest rate on a case-by-case basis. Generally, they reserve the lowest rates for low-risk borrowers — that is, those with a higher credit score, income, and down payment amount. Here are some other personal factors that may determine your mortgage rate:

Other indirect factors that may determine the mortgage rate include:

The lender you choose can also affect your mortgage rate. Some lenders have higher average mortgage rates than others, regardless of your credit or financial situation. That’s why it’s important to compare lenders and loan offers.

Here are some of the best ways to compare mortgage rates and ensure you get the best one:

Tip

Use a mortgage calculator to see how different interest rates impact your monthly payment amount and the total cost of the loan. Just remember, certain fees like homeowners insurance or taxes might not be included in the calculations.

Here’s a simple example of what a 15-year fixed-rate mortgage might look like versus a 30-year fixed-rate mortgage:

Pros and cons of mortgages

If you’re thinking about taking out a mortgage, here are some benefits to consider:

Pros

Cons

Requirements vary by lender, but here are the typical steps to qualify for a mortgage:

  • Review any assets: Lenders consider your assets when deciding whether to lend you money. Common assets include money in your bank account or investment accounts.
  • Know your DTI: Your DTI is the percentage of your gross monthly income that goes toward your monthly debts — like installment loans, lines of credit, or rent. The lower your DTI, the better your approval odds.
  • Check your credit score: To get the best mortgage rate possible, you’ll need to have good credit. However, each loan type has a different credit score requirement. For example, you’ll need a credit score of 580 or higher to qualify for an FHA loan with a 3.5% down payment. Check your credit score to see what you qualify for.
  • Know the property type: During the loan application process, you may need to specify whether the home you want to buy is your primary residence. Lenders often view a primary residence as less risky, so they may have more lenient requirements than if you were to get a secondary or investment property.
  • Choose the loan type: Many types of mortgage loans exist, including conventional loans, VA loans, USDA loans, FHA loans, and jumbo loans. Consider your options and pick the best one for your needs.
  • Prepare for upfront and closing costs: Depending on the loan type, you may need to make a down payment. The exact amount depends on the loan type and lender. A USDA loan, for example, has no minimum down payment requirement for eligible buyers. With a conventional loan, you’ll need to put down 20% to avoid private mortgage insurance (PMI). You may also be responsible for paying any closing costs when signing for the loan.

    • Here are the basic steps to apply for a mortgage, and what you can typically expect during the process:

  • Choose a lender: Compare several lenders to see the types of loans they offer, their average mortgage rates, repayment terms, and fees. Also, check if they offer any down payment assistance programs or closing cost credits.
  • Get pre-approved: Apply for pre-approval to boost your chances of getting your dream home. You’ll need identifying documents, as well as paperwork verifying your employment, income, assets, and debts.
  • Submit a formal application: Complete your chosen lender’s application process — either in person or online — and upload any required documents.
  • Wait for the lender to process your loan: It can take some time for the lender to review your application and make a decision. In some cases, it may request additional information about your finances, assets, or liabilities. Provide this information as soon as possible to prevent delays.
  • Complete the closing process: If approved for a loan, you’ll receive a closing disclosure with information about the loan and any closing costs. Review it, pay the down payment and closing costs, and sign the final loan documents. Some lenders have an online closing process, while others require you to go in person. If you are not approved, you can talk to your lender to get more information and determine how you can remedy any issues.

    • Refinancing your mortgage lets you replace your current loan with a new one. It does not mean taking out a second loan. 

    You might want to refinance your mortgage if you:

    The refinancing process is similar to getting the original loan. Here are the basic steps:

    If you need to tap into your home’s equity to pay off debt, fund a renovation, or cover an emergency expense, there are two popular options to choose from: a home equity loan and a home equity line of credit (HELOC). Both a home equity loan and a HELOC allow you to borrow against your home’s equity but a home equity loan comes in the form of a lump sum payment and a HELOC is a revolving line of credit.

    These two loan types have some other key similarities and differences in how they work:

    Home equity loan

    Home equity line of credit (HELOC)

    Interest rate

    Fixed

    Variable

    Monthly payment amount

    Fixed

    Variable

    Closing costs and fees

    Yes

    Yes, might be lower than other loan types

    Repayment period

    Typically 5-30 years

    Typically 10-20 years

    Interest rates on mortgages fluctuate all the time, but a rate lock allows you to lock in the rate a lender offers you for a set amount of time. This ensures you get the rate you want as you complete the homebuying process.

    Mortgage points are a type of prepaid interest that you can pay upfront — often as part of your closing costs — for a lower overall interest rate. This can lower your APR and monthly payments. 

    Closing costs are the fees you, as the buyer, need to pay before getting a loan. Common fees include attorney fees, home appraisal fees, origination fees, and application fees.

    Meet the contributor:

    Angela Mae

    Angela Mae

    Angela Mae is a Credible authority on personal finance. Her work has been featured by Credit Karma, Lendstart, and GoodRx.

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