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• Mortgage interest rates are influenced by a mix of factors, including the economy and your credit history.
• Fixed-rate mortgages offer consistent monthly payments over the life of the loan.
• Adjustable-rate mortgages (ARMs) have rates that can change — up or down — along with benchmark rates.
• A government-backed loan (FHA, VA, or USDA) can be a great option with a low down payment.
• Elevating your credit score and managing your debt-to-income ratio can lead to better interest rates.
• Exploring California assistance programs can make homeownership more affordable.
Introduction to Mortgage Refinance Rates
Understanding mortgage rates can be valuable for homebuyers, especially in the Sacramento area. This guide offers a look at how mortgage rates in California are determined, as well as advice on how to secure the best possible rate for your home loan. We’ll dive into the primary economic factors and personal financial considerations that can influence these rates, providing actionable tips and practical guidance. Armed with this knowledge, you can confidently navigate the mortgage landscape, potentially saving a substantial amount over the life of your loan.
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 interest rates are not the same for every person or in every place. They are influenced by the bond market, with the 10-year U.S. Treasury Note as the primary benchmark for lenders. When interest rates on the note rise, mortgage rates tend to head in the same direction. The housing market also plays a key role. A strong housing market, combined with increasing inflation, can push mortgage rates higher for homebuyers.
Mortgage rates are also personalized to the borrower. Your credit score is a significant predictor of the rate you’ll be offered. The higher the score, the lower the rate you’ll likely obtain. Making a larger down payment can result in a lower interest rate because borrowers who have more equity are perceived as a lower default risk by the lender.
Finally, your debt-to-income (DTI) ratio is an important metric. In general, mortgage lenders like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum. In California, all these factors play a significant role in the determination of mortgage rates.
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
In California, even a small change in mortgage rates can have a big impact on your ability to buy a home. For example, if you take out a $400,000 loan at a 6.50% interest rate, your monthly payment will be $2,528. But if the rate goes up to 7.00%, your monthly payment will jump to $2,661. Over the life of a 30-year mortgage, that 0.50% difference will add up to almost $48,000 in interest payments. This is especially important to keep in mind if you’re looking at mortgage rates in Sacramento, California, where the housing market is competitive and prices are high.
Historical mortgage rates in California and throughout the country can be a great indicator of what the future might hold for Sacramento.
Historical U.S. Mortgage Rates
Historical mortgage rates have seen their fair share of ups and downs, playing a pivotal role in the housing market’s ebb and flow. From the 1970s to the 2020s, we witnessed rates reach over 18.00% and then plummet to under 3.00%. The Federal Reserve’s policies and the ever-changing economic climate have been the driving forces behind these dramatic shifts. By gaining a deeper understanding of these factors, you can position yourself to make more informed decisions when it comes to purchasing a home and navigating the complex landscape of mortgage financing.
Historical Interest Rates in California
The table shows how California’s rate has compared to the national average in recent decades. As you can see, the state rate is similar to the national rate — sometimes above, and sometimes below. (The Federal Housing Finance Agency stopped compiling this state-level data after 2018.)
Year
California Rate
U.S. Rate
2000
7.18
8.14
2001
6.78
7.03
2002
6.20
6.62
2003
5.54
5.83
2004
5.48
5.95
2005
5.65
6.00
2006
6.49
6.60
2007
6.38
6.44
2008
6.13
6.09
2009
5.08
5.06
2010
4.83
4.84
2011
4.54
4.66
2012
3.69
3.74
2013
3.85
3.92
2014
4.04
4.24
2015
3.80
3.91
2016
3.63
3.72
2017
3.94
4.03
2018
4.38
4.57
Source: Federal House Finance Agency
Should You Wait for Interest Rates to Drop?
Whether or not you’re hoping to qualify as a first-time homebuyer in Sacramento, you may be wondering if you should wait for mortgage rates in California to drop. According to current market predictions, it’s likely that rates will remain relatively stable through 2025 and 2026. So what should you do? The best course of action is to carefully consider your personal financial readiness, including your savings and credit score, and to evaluate overall market conditions before making a decision. Only you can determine whether buying now is the right choice for you.
And keep in mind, if interest rates drop after you purchase a home, you can always take advantage of lower rates with a mortgage refinance.
See How Sacramento’s Costs Stack Up
The cost of living in Sacramento is relatively affordable compared to coastal areas like San Francisco, Los Angeles, and San Diego. However, it’s still expensive by national standards.
Here’s how Sacramento compares to other California cities on an index where 100 equals the average cost of living in the U.S.
California City
Cost of Living
Bakersfield
111.7
Los Angeles-Long Beach
149.4
Oakland
137.7
Orange County
156.3
Redding
110.5
Sacramento
128.8
San Diego
145.3
San Francisco
166.8
San Jose
180.6
How to Get Your Best Possible Rate in Sacramento
To get the best mortgage interest rate in Sacramento, you’ll need to focus on a few key factors.
• Improve your credit score by paying down your credit card balances and making all your payments on time.
• Lower your DTI ratio by paying down your debts.
• A higher down payment can help you secure a lower interest rate.
• Lenders may also look at your employment history to make sure you have a steady source of income
• Consider going through the mortgage preapproval process. This will give you a better idea of what you can afford.
• You may also want to look into government-backed loan programs, which often have lower interest rates than conventional loans. Find out more about those programs below.
Using a mortgage calculator is a great first step to understanding the impact of different interest rates in Sacramento, and how those rates will affect your monthly payments over the life of the loan. These calculators are easy to use and can be quite effective for prospective homebuyers. They take into account the loan amount you are requesting, the term length of the loan you select, and the interest rate to provide a clear and accurate financial picture of your future obligations, allowing you to make informed decisions.
Here are three of our favorite mortgage calculators:
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.
Types of Mortgages Available in Sacramento
In Sacramento, the type of mortgage loan you choose can affect the interest rate you’re offered. Conventional loans typically require a credit score of 620 or higher, but the average credit score for recent homebuyers is 758.
If you don’t meet the stricter requirements of conventional mortgages, FHA, VA, and USDA loans may be a good option for you. These government-backed loans often feature lower down payment options and more flexible credit requirements. They can be particularly beneficial for first-time homebuyers or those with limited savings for a down payment.
Fixed-Rate Mortgage
Fixed-rate mortgages in Sacramento provide homeowners a steady financial course with an interest rate that doesn’t waver over the life of the loan. This predictability is a key element in financial planning, ensuring your monthly payments remain consistent, which is great for managing your budget. Loan terms are typically available for 10, 15, 20, or 30 years. This range of options means you can choose a repayment schedule that fits your financial goals and current situation. Picking the right term is crucial to keeping your payments affordable and manageable over time.
Adjustable-Rate Mortgage (ARM)
In Sacramento, adjustable-rate mortgages (ARMs) often offer lower initial interest rates than traditional fixed-rate loans. This can be a big advantage if you plan to sell your home before the initial fixed-rate period ends. But keep in mind that the interest rate — and your payments — could go up after the fixed period. That’s why it’s important to consider how long you plan to stay in your home and how you’ll handle the possibility of your payments going up.
FHA Loan
With the Federal Housing Administration standing behind them, FHA loans are known for their more forgiving eligibility criteria when compared to conventional loans. They’re often the go-to for first-time buyers with lower credit scores, as a score of 580 can typically secure approval. In Sacramento, these loans often come with competitive mortgage rates and can be a lifeline for those with limited financial resources. The CalHFA FHA loan, for instance, offers a 30-year fixed-rate mortgage and comes bundled with down payment and closing cost assistance programs.
VA Loan
VA loans are a great option for those who are eligible, including active-duty military, veterans, reservists, National Guard members, and surviving spouses. One of the main benefits of a VA loan is the ability to purchase a home with no down payment. This can make homeownership a reality for many people who might not otherwise be able to afford it. In Sacramento, VA loans offer competitive mortgage rates and can be a great option for those who qualify. The CalHFA VA loan program offers even more assistance to veterans in need, making it an excellent program to consider.
Jumbo Loan
In most areas, the 2025 conventional mortgage loan limit for a single-family home purchase is $806,500. (More expensive counties including Los Angeles, San Francisco, and Orange have a limit of $1,209,750.) Jumbo loans, which exceed that limit, are available in Sacramento for those looking to purchase higher priced properties. Keep in mind, these loans may carry slightly higher interest rates than conventional loans, but they can still be competitive in the current market.
USDA Loans
USDA loans are designed for lower-income borrowers looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA) and offer competitive interest rates and relaxed credit requirements. Note: SoFi does not offer USDA loans at this time, but we do offer FHA and VA loans.
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:
How to Evaluate Loan Offers in Sacramento
Securing a competitive mortgage rate is a smart financial move, as even a fraction of a percentage point can add up to substantial savings over the life of your loan. By comparing interest rates and fees from multiple lenders, you can ensure you’re getting the best deal. Pay attention to the annual percentage rate (APR), which encompasses fees, closing costs, and discount points.
Once you’ve found a loan offer that suits you, consider locking in the rate for up to 90 days, for a small fee, if you’re concerned about potential rate hikes.
Sacramento Mortgage Resources
California is home to a wealth of resources and programs designed to help homebuyers, especially if you’re buying your first home or have limited financial means. Did you know you might be considered a first-time buyer if you haven’t owned a primary residence in the last three years?
The California Housing Finance Agency (CalHFA) and its MyHome program offer a variety of mortgage options and support, including down payment assistance programs and help with closing costs. By taking the time to explore these resources, you can significantly increase your chances of securing a favorable mortgage rate in Sacramento.
Closing Costs in Sacramento
If you’re buying a home in Sacramento, you can expect to pay between 2% and 5% of your loan amount in closing costs. For a $788,000 home — the average home value in California in early 2025 — that’s between $16,000 and $40,000.
The amount you’ll pay will depend on a variety of factors, including the price of the home and its location within the city. Common closing costs in Sacramento include loan origination fees, appraisal fees, credit report fees, title insurance premiums, and property taxes. Understanding these costs and shopping around for the best mortgage rates can help you save money on your home purchase.
The Takeaway
Sacramento’s mortgage landscape is as diverse as the city itself, offering a wealth of options for those looking to become homebuyers. Staying informed about current mortgage rates in Sacramento and exploring available assistance programs are important tactics for prospective buyers. Whether you’re a first-time buyer or a seasoned homeowner, taking advantage of all available resources can make the process smoother and more affordable.
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.
Will mortgage rates drop in Sacramento, California?
Many economists predict that mortgage rates in Sacramento will remain stable into 2026, but no one can say for sure. Keeping an eye on economic factors like inflation and Treasury bond prices can help homeowners anticipate where mortgage rates may be headed. However, what’s more important is weighing your personal financial readiness and your satisfaction with the available homes in your price range.
Will mortgage rates ever return to normal?
While rates have increased in recent years, they are still well below the peaks seen in previous decades. So today’s rates may be “normal” to seasoned homebuyers who remember when they were much higher. Waiting for lower rates is typically less helpful than examining whether you can afford to purchase a home and whether this is the right time to do so, based not only on cost but also on your personal situation — for example, if you are relocating, your family size is growing, or your rental lease is ending.
How do you lock in a mortgage rate?
Shop around and compare mortgage offers from multiple lenders to zero in on the best available rates. Once you’ve selected a lender, ask them about locking in the rate: Rate locks, which typically last 30 to 60 days, are sometimes free but often cost between 0.25% and 0.50% of the loan amount.
How do mortgage interest rates function?
Mortgage interest rates, presented as a percentage, are essentially the cost of borrowing money to purchase a home. Rates are influenced by economic conditions and your personal financial history. Fixed-rate mortgages have rates that remain stable, while adjustable-rate loans (ARMs) have rates that can change over time. It’s important for homebuyers to understand the basics of mortgage rates, since even small rate changes can translate to thousands of dollars over the life of a 30-year loan term.
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*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.
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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.
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.
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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