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• Mortgage rates are influenced by economic conditions and borrower creditworthiness.
• Fixed-rate mortgages offer predictable payments, while adjustable-rate mortgages (ARMs) have fluctuating rates.
• FHA and VA loans are good options for first-time homebuyers, offering low down payments.
• The better your credit score and the more substantial your down payment, the lower your mortgage interest rate could be.
• Your mortgage interest might be tax-deductible, if used for home improvements.
• Shop around for the best interest rates and fees to save significant money over the long term.
Introduction to Mortgage Refinance Rates
Understanding mortgage rates is essential for all homebuyers, but particularly for first-time buyers in Los Angeles. This guide is designed to demystify how rates are set and provide insight into how you can secure the best possible rate for your circumstances. We’ll explore the major economic indicators that can influence rates, as well as the personal financial factors that come into play. Armed with this knowledge, you’ll be better equipped to make informed decisions as you navigate the home-buying process.
Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a home. These mortgage rates are determined by a complex combination of factors that can be separated into two buckets: the state of the economy and the borrower’s financial status.
Where Mortgage Rates Come From
Mortgage rates are significantly influenced by the bond market, and particularly by the movement of the 10-year U.S. Treasury Note. Generally, when the yield on the Treasury note rises, mortgage rates tend to follow suit and increase as well.
The health of the housing market and the inflation rate also play roles in determining mortgage rates. For instance, when the housing market heats up or inflation rises, mortgage rates in California may also climb. Understanding these factors can be very helpful when trying to strategically time your home loan.
Your personal financial profile also contributes to your mortgage rate. Lenders will examine the following:
• Your credit score: The higher the score, the lower the rate you’ll be offered.
• Your down payment: Making a larger down payment can result in a lower interest rate because lenders perceive a lower default risk.
• Your debt-to-income (DTI) ratio. In general, mortgage lenders like to see a DTI ratio of no more than 36%.
See how your debts may affect your mortgage
Use SoFi’s debt-to-income calculator to determine your personal DTI number.
How Interest Rates Affect Home Affordability
Interest rates play a significant role in determining how much home you can afford. The average home value in Los Angeles was $978,000 in early 2025. If you apply for an $800,000 mortgage, a 6.50% interest rate means a $5,056 monthly payment. But if the rate jumps to 7.00%, your monthly payment will also increase to $5,322. What’s really striking is how that additional interest adds up over a 30-year repayment term: The lower interest rate will save you more than $95,000.
The chart below shows how seemingly small changes in interest rates can impact your monthly payment and total interest on an $800,000 mortgage.
While interest rates might feel high to some Los Angeles homebuyers, rates are lower than they have been historically, as you can see in the line chart below. In fact, current rates are near the 50-year average. The table shows how the mortgage rate in Los Angeles tends to follow the national rate, often hovering just below it. (The Federal Housing Finance Agency stopped compiling Los Angeles data after 2014.)
By recognizing these patterns, you can make more informed decisions about when to buy a home or refinance a mortgage.
Year
Los Angeles Rate
U.S. Rate
2000
7.19
8.14
2001
6.78
7.03
2002
6.27
6.62
2003
5.55
5.83
2004
5.46
5.95
2005
5.61
6.00
2006
6.50
6.60
2007
6.41
6.44
2008
6.12
6.09
2009
5.06
5.06
2010
4.79
4.84
2011
4.54
4.66
2012
3.67
3.74
2013
3.82
3.92
2014
4.01
4.24
Source: Federal House Finance Agency
Types of Mortgages Available in Los Angeles
In the Los Angeles metro area, you have a wealth of mortgage options at your fingertips. The conventional mortgage is a popular choice, but it’s not right for every financial situation. To ensure you get the best deal, take the time to compare the different types of mortgage loans.
Fixed-Rate Mortgage
Fixed-rate mortgages are the gold standard of home loans. They offer a consistent interest rate that remains the same throughout the entire loan term, which means you can count on stable monthly payments. These mortgages are available in various term lengths, such as 10, 15, 20, 30, or even 40 years. Because they’re predictable, fixed-rate loans are great for people who like to plan ahead.
Adjustable-Rate Mortgage (ARM)
ARMs start off with a lower rate than fixed-rate loans, which can work in your favor if you’re eyeing a sale before the fixed period ends. ARMs usually have an initial fixed-rate period, after which the rate can adjust based on market conditions. This flexibility can be a boon in a low-rate climate, but it’s essential to consider the potential for higher payments if rates go up.
FHA Loan
With the Federal Housing Administration’s seal of approval, FHA loans come with friendlier eligibility terms than many conventional loans. A 3.5% down payment is all it takes to open the door to homeownership, making this a popular choice for first-time buyers, especially those with credit scores below the 620 cut-off for conventional loans.
FHA loans also offer lower interest rates than conventional loans, though the APR may be higher due to the mortgage insurance premium (MIP). FHA loans require an upfront MIP of 1.75% of the base loan amount (which can be rolled into the loan). And there’s a monthly MIP of 0.15% to 0.75%.
VA Loans
VA loans are a tremendous benefit for eligible active-duty military members, veterans, reservists, National Guard members, and surviving spouses. One of the most significant benefits of VA loans is that they typically do not require a down payment. Additionally, VA loans often offer competitive mortgage rates in Los Angeles, California and generally very competitive mortgage rates throughout California.
Just be aware that there is a one-time funding fee that is paid either at closing or rolled into your mortgage. A first-time VA loan borrower with a 0% down payment, for instance, would pay a 2.15% funding fee.
Jumbo Loans
In Los Angeles County, conforming loans have an upper limit of $1,209,750. If you are looking to finance more than that amount, you’ll need a jumbo loan. These loans come with a slightly higher interest rate and more stringent qualification requirements, but they are key to unlocking higher priced properties.
Current mortgage rates by state.
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 contemplating a home purchase in L.A., you might be wondering if it’s wise to hold off for a potential dip in mortgage rates. The experts at Fannie Mae, however, are predicting that rates will hold steady in the months to come, hovering around 6.30% by the close of 2025. Your financial readiness is typically a better signal of when it’s the right time to buy than mortgage rates.
You can always consider the possibility of a mortgage refinance down the line if rates do take a significant tumble.
Cost of Living in Los Angeles
The overall cost of living in Los Angeles has an impact on home prices and how you fit mortgage payments into your budget. While Los Angeles is much more expensive than the U.S. a while, it’s not the priciest area in California.
Here’s how Los Angeles compares to other California cities on an index where 100 equals the average cost of living in the U.S.
To secure the best mortgage rates in Los Angeles, you’ll want to consider taking steps like improving your credit score and lowering your debt-to-income (DTI) ratio. A higher credit score and a lower DTI can lead to better mortgage rates. To strengthen your loan application and increase your chances of approval, you can also consider increasing your down payment, maintaining a steady income (this is not the time to job-hop), and going through the mortgage preapproval process with a lender.
These steps can help you demonstrate financial stability and creditworthiness to potential lenders, which can help you get more favorable terms.
Helpful Tools & Calculators
Use mortgage calculators to get a sense of your monthly payments and what you can expect to pay in total interest over the life of the loan. You should also consider other factors, such as your planned down payment amount, loan term, and interest rate type, to find the best mortgage option for your long-term financial goals.
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. Any payments shown depend on the accuracy of the information provided.
How to Evaluate Loan Offers in Los Angeles
A competitive mortgage rate can save you thousands, and possibly much more. Make sure you compare rates and fees from multiple lenders, to get a sense of the average rates for your financial situation. Focus on the annual percentage rate (APR) — not just the interest rate — which includes fees, closing costs, and discount points.
After choosing an offer, lock in your rate for up to 90 days for a fee, if you’re concerned about rising mortgage rates.
Los Angeles Mortgage Resources
Did you know that housing assistance programs usually consider anyone who hasn’t owned a home in the previous three years to qualify as a first-time homebuyer?
California is a treasure trove of resources and programs to help you achieve your dream of owning a home, especially if you have limited financial means. The California Housing Finance Agency (CalHFA) is your go-to for various mortgage options, from FHA and VA to conventional loans, all bundled with closing cost and down payment assistance programs. For example, the CalHFA FHA loan can get you a 30-year fixed-rate mortgage with just a 3.5% down payment, and the CalPLUS FHA loan sweetens the deal with zero-interest closing cost assistance.
Closing Costs in Los Angeles
In Los Angeles, you’re typically looking at 2% to 5% of your loan amount in closing costs. For an $800,000 mortgage, that’s $16,000 to $40,000 you’ll need to come up with. These costs might include loan origination fees, appraisal fees, and title insurance. Here’s a tip: To keep these costs in check, be proactive. Shop around, compare lenders, and don’t hesitate to negotiate fees.
The Takeaway
Los Angeles’ mortgage landscape offers a variety of options for those looking to purchase a home. By keeping up with current mortgage rates and looking into available assistance programs, you can make well-informed decisions that align with your financial goals and help you achieve successful homeownership in L.A. Whether you’re buying your first home or a seasoned homeowner, understanding the various mortgage types and resources available can help you navigate the complex and often expensive process of buying a home in California.
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.
No one can provide a crystal-clear answer about the future of mortgage rates in Los Angeles. However, history often serves as a reliable guide. If the Federal Reserve opts to lower interest rates to give the economy a boost, you might see a corresponding dip in mortgage rates in Los Angeles. Keeping an eye on the 10-Year Treasury Note yield can give you a strong hint of which direction mortgage rates are headed.
Will mortgage rates ever go back to normal?
Mortgage rates are actually close to the historical average right now. If you’re looking for the rock-bottom rates of the pandemic era, that’s unlikely to happen anytime soon. Economists are anticipating that mortgage rates will hover around 6.30% through 2025, with only marginal movement in 2026.
Will Los Angeles home prices ever come down?
The real estate market in Los Angeles has been on the up and up, with high prices becoming the norm. Factors such as limited housing supply — exacerbated by the wildfires — and a strong demand for properties have contributed to this trend. While minor fluctuations are possible, a significant drop in prices is less likely without major economic shifts or a recession. If you’re looking to buy, understanding mortgage rates can help you make an informed decision about when to take the plunge. Armed with this knowledge, you’ll be in a great position to make your move.
How do I lock in a mortgage rate?
Locking in a mortgage rate is fairly simple. Shop around and compare offers from multiple lenders — banks, credit unions, and online lenders included. Once you’ve found a rate that speaks to you, ask the lender to lock it in, typically up to 90 days. You’ll pay a small fee in most cases, but it will guard you against rate hikes during the closing process.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
*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.
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.
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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