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• Mortgage rates are influenced by both economic and personal factors.
• Fixed-rate mortgages offer stable payments for the life of the loan, while ARMs have fluctuating rates and payments.
• Higher credit scores and larger down payments can lead to better mortgage rates.
• First-time homebuyers can tap into a wealth of programs, including down payment assistance.
• Even a small change in the mortgage rate can make a big difference in the long run.
Introduction to Austin Mortgage Interest Rates
When it comes to buying a home in Austin, Texas, understanding mortgage rates is crucial. This guide is designed to help first-time homebuyers navigate the home loan market with confidence. By explaining how mortgage rates are determined and offering tips on how to secure the lowest rate possible, we aim to empower you to make informed financial decisions. Step one on the path to home loan happiness? Understanding how mortgage rates are determined in the first place.
First-time homebuyer programs usually consider anyone who hasn’t owned a home in the previous three years to be a “first-timer.” If you think you might qualify as a first-time homebuyer, you could enjoy special benefits such as lower down payment minimums, grants, and closing cost assistance.
Where Mortgage Rates Come From
Mortgage rates are influenced by a number of economic factors, and as these numbers shift and change, rates change as well. The bond market, particularly the 10-year U.S. Treasury Note, is a leading indicator of where mortgage rates are headed. When the T note goes up, mortgage rates generally do the same. The housing market and the level of inflation also influence mortgage rates in Texas. Inflation decreases the value of the dollar and its future purchasing power. With lenders receiving less money in the future, they will charge more for their loans.
But while these large economic trends point rates in a general direction, lenders will set your specific rate based on your credit score, debt-to-income (DTI) ratio, and down payment amount. A score of 620 or better will likely be needed for a conventional loan; some government-backed loans allow lower credit scores for qualifying buyers. By staying informed and understanding these moving parts, you’re better equipped to snag a good rate in Austin.
See how your debt level may affect your mortgage
Use SoFi’s debt-to-income calculator to determine your personal DTI number.
See how your debt level may affect your mortgage
Use SoFi’s debt-to-income calculator to determine your personal DTI number..
How Interest Rates Affect Home Affordability
It’s worth it to spend time understanding mortgage rates and searching for a good one, because over the term of your home loan, the dollars add up. It’s not unusual for buyers in Austin to need a loan of around $400,000. The chart below shows how different interest rates and loan terms affect the amount of the monthly payment and the total interest paid over the life of a $400,000 loan. As you can see, a change of one percentage point, from 7.00% to 6.00% could save a homeowner almost $100,000.
Interest Rate
Loan Term
Monthly Payment
Total Interest
6.00%
30-year
$2,398
$463,353
6.00%
15-year
$3,375
$207,577
7.00%
30-year
$2,661
$558,036
7.00%
15-year
$3,595
$247,156
Austin, Texas Mortgage Rate Trends
Historical U.S. Mortgage Rates
Having some sense of the history of mortgage rates can help provide perspective during your home loan search. Though rates have seen an uptick in recent years after bottoming out in 2021, they’re still a far cry from the peaks of the early 1980s. Average rates in Texas, as the chart shows, have often landed below the U.S. average, which may be of some comfort to homebuyers in Austin.
Year
Texas Rate
U.S. Rate
2000
8.03
8.14
2001
7.01
7.03
2002
6.61
6.62
2003
5.81
5.83
2004
5.94
5.95
2005
5.98
6.00
2006
6.71
6.60
2007
6.54
6.44
2008
6.15
6.09
2009
5.04
5.06
2010
4.76
4.84
2011
4.52
4.66
2012
3.59
3.74
2013
3.80
3.92
2014
4.08
4.24
2015
3.79
3.91
2016
3.66
3.72
2017
3.98
4.03
2018
4.57
4.57
Source: Federal House Finance Agency
Types of Mortgages Available in Austin, Texas
The type of mortgage you choose will also influence the rate you get, and in Austin, you have many types of mortgage loans to consider. By thoroughly exploring them, you can find the best financing solution for your needs and financial situation. Here are the most common types.
Fixed-Rate Mortgage
Fixed-rate mortgages are the bedrock of home financing. They offer the security of a consistent interest rate over the entire loan term, meaning monthly payments will remain steady. With terms typically available in 10, 15, 20, 30, or even 40 years, you can choose the one that best suits your financial strategy. The shorter your term, the higher your monthly payments will be, but the less interest you will pay over the life of the loan. If you value predictability in your expenses and want to guard against the risk of increasing market interest rates, a fixed-rate mortgage is a wise choice.
Adjustable-Rate Mortgage (ARM)
Now, let’s look at adjustable-rate mortgages (ARMs). ARMs usually start with a lower interest rate than traditional fixed-rate mortgages, which can help lower your upfront costs. Just keep in mind that the rate can change after the initial fixed period, and your monthly payments could go up (or down). An ARM could be a smart choice if you’re planning to sell or do a mortgage refinance before the initial fixed-rate period ends.
FHA Loan
FHA loans, backed by the Federal Housing Administration, are made to open the doors to homeownership for a wide range of individuals and families. They often feature more relaxed eligibility requirements, such as lower minimum down payments and more accommodating credit score thresholds, which can be a game-changer. The minimum credit score for an FHA loan is 500, and that will require a 10% down payment. Once your credit score hits 580, a low 3.5% down payment is possible.
VA Loan
VA loans are a great opportunity for eligible active-duty military members, veterans, reservists, National Guard members, and surviving spouses. One of the main benefits of VA loans is that they typically do not require a down payment. This makes them a great option for first-time homebuyers who don’t have a lot of savings or a big budget. The first step in qualifying for a VA loan is to make sure you can get a Certificate of Eligibility from the VA.
Jumbo Loan
Throughout Texas, conventional mortgage loans are capped at $806,500 for a single-family home. If you need a mortgage that exceeds this limit, you’re looking for a jumbo loan. These specialized loans often come with higher interest rates and may include stricter qualification criteria. But they can still be a good option for those looking to purchase more expensive homes in Austin’s hot spots. Jumbo loans may require a larger down payment and a higher credit score from borrowers.
Compare current home interest rates by state and find a mortgage rate that suits your financial goals.
Select a state to view current rates:
Should You Wait for Interest Rates to Drop?
If you’re looking to buy a home in Austin, you might be wondering if you should hold off on your purchase in hopes of lower interest rates. The answer? If you wait, you might have to wait quite a while. In early 2025, projections from Fannie Mae indicated that rates might hover around 6.30% by the year’s close. And looking ahead to 2026, to the extent anything is visible in such an unsettled financial market, rates are predicted to hold fairly steady.
While a rate drop could mean big savings, remember that you can always refinance down the line. Ask yourself if waiting would have hardships of its own. Look at your current housing costs versus the costs of a mortgage on a home in your price range. And if you are renting, think about the fact that if you buy, you start building equity.
The Cost of Living in Austin
Austin may be one of the more costly cities in Texas to live in, but it still falls below the U.S. average cost of living as a whole. Home prices are on the higher side here, with the median sale price topping $513,000.
The chart on the right shows how the cost of living in Austin stacks up against other Texas metropolitan areas on a scale where 100 equals the average cost of living in the U.S.
Texas City
Cost of Living
Abilene
90.6
Amarillo
83.3
Arlington
95.7
Austin
97.4
Beaumont
91.8
Conroe
90.0
Corpus Christi
89.2
Dallas
101.8
Denton
99.2
El Paso
88.1
Fort Worth
96.1
Harlingen
82.1
Houston
94.2
Longview
93.9
Lubbock
90.4
McAllen
85.1
Midland
96.4
Nacogdoches
89.6
Odessa
93.0
Plano
110.0
San Antonio
91.2
Temple
90.0
Tyler
93.9
Waco
91.7
Get Your Best Possible Rate in Austin
To secure the best mortgage rate available to you in Austin, focus on strengthening your credit score as much as possible. Check your credit report and request corrections on any inaccuracies. Pay your bills on time. And look to reduce your overall debts for a better DTI ratio. Examine your budget to see how large a down payment you can afford. And consider going through the mortgage preapproval process with a lender to help you set a budget and make a more competitive offer.
Using a mortgage payment calculator is a great first step to gain a better understanding of the potential impact of different mortgage rates when purchasing property in Austin. In fact, there are calculators for each step of the purchase process.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Amo payments shown depend on the accuracy of the information provided.
How to Evaluate Loan Offers in Austin
Securing a competitive mortgage rate means getting competing offers from different lenders and then evaluating them side by side. As you consider loan offers in Austin, be sure to look not just at interest rates but at the annual percentage rate (APR) on each loan. This number factors in fees, closing costs, and discount points. Worried about rates going up? Once you’ve found your winning combination of loan, lender, rate, and fees, consider paying your preferred lender to lock in your rate for up to 90 days, giving you peace of mind while you finalize your home search.
Austin Mortgage Resources
Down payment assistance programs and other government-sponsored programs can help get those with limited resources into a home in Austin. This is especially true if you are buying your first home. (You could qualify as a first-time homebuyer if you haven’t owned a primary residence in the last three years.) The Texas Department of Housing and Community Affairs (TDHCA) offers the My First Texas Home and My Choice Texas Home programs, which provide 30-year, low-interest mortgages and up to 5% in down payment assistance. By tapping into resources like these, homebuyers could significantly reduce the financial burden of purchasing a home in Austin.
Closing Costs in Austin
For those ready to make their home purchase in Austin, closing costs are typically around 2% to 5% of the total loan value. These costs aren’t set in stone and can vary based on a number of factors, such as the property’s value and where it’s located within the city. Make sure you budget for this cost properly when you’re considering your home budget in Austin.
The Takeaway
Austin is a great place to buy a home, and the city offers a wide variety of mortgage options for both first-time buyers and repeat purchasers. By staying on top of current mortgage rates in Austin and researching any available assistance programs, you can make the best possible decisions when it comes to your financial future.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
Mortgage rates have varied widely over time, so what is “normal” to one cohort of homebuyers may be abnormal to another. While rates have increased in recent years, they are still well below peaks seen in previous decades. So waiting for “normal” to return may be less helpful than examining whether you can afford to purchase a home and asking yourself whether this is the right time to do so based not only on cost but also on your personal situation — for example, whether you are relocating, expecting your first child, or nearing the end of your lease.
Will Austin, Texas home prices ever go down?
The residential real estate market in Austin has already started to decline after highs fueled by a tech boom and population influx in recent years. The median home sale price has declined, although it still tops $500,000.
How to secure a mortgage rate
To secure a favorable mortgage rate in Austin, Texas, you’ll want to ask your lender for a rate lock agreement. You’ll typically pay a fee, and the lender will lock in the rate for up to 90 days.
How do mortgage interest rates function?
Mortgage interest is the fee you pay to borrow money to buy a home. It’s calculated as a percentage of the total loan amount. Mortgage rates can be fixed or variable. Fixed rates stay the same for the entire loan term, which makes your monthly payment consistent. Variable rates can change over time, based on the market rates. The interest rate you get is influenced by your credit score and the size of your down payment, among other factors.
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¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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