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• Mortgage rates are influenced by economic conditions and the borrower’s financial profile.
• Fixed-rate mortgages offer stability, while adjustable-rate mortgages have rates that can change over time.
• A higher credit score and a larger down payment can help you secure lower mortgage rates.
• A mortgage calculator can help you estimate monthly payments and total costs.
• In a competitive market, getting mortgage preapproval can help buyers compete.
Introduction to Mortgage Interest Rates
Mortgage interest rates are a big deal when you’re buying a home, and they’re a particularly big deal in San Francisco, where the housing market is competitive and expensive. In this guide, we’ll help you comprehend how home loan rates are determined in the current economic climate and how you can get the lowest mortgage rates possible in San Francisco. Let’s start by understanding how lenders decide rates 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 factors, some of which are large economic trends and others that are very personal to each borrower. The yield on the 10-year U.S. Treasury note is a leading indicator of where mortgage rates are headed. When it moves higher, rates tend to follow. The housing market and the rate of inflation also have an impact on mortgage rates. If the housing market is slowing down, lenders might drop rates a bit to help spark sales. In a recession, rates might fall as well.
The factors that are personal to you are perhaps more important, because you have some control over them:
• Your credit score is the prime indicator of your creditworthiness. Lenders typically seek a credit score of 620 or above for favorable terms, but the higher, the better. Government-backed loans can offer opportunities for those who can’t hit the 620 mark.
• the amount of your down payment is also a factor. A larger down payment can result in a lower interest rate because you’ll be perceived as having a lower default risk.
• Your debt-to-income (DTI) ratio will be examined. In general, mortgage lenders like to see a DTI ratio of no more than 36%, though that is not necessarily the maximum.
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
Mortgage rates play a pivotal role in home affordability. The chart below shows how different interest rates and loan terms affect the amount of a borrower’s mortgage payment and the total interest paid over the life of a $400,000 loan, a rather modest sum in San Francisco’s market.
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
Needless to say, the more you borrow, the bigger the impact of a lower interest rate. If you borrowed $1 million at 6.00%, your monthly payment would be $5,996 and your total interest paid would be $1,158,381. At 7.00%, your monthly charge would be $6,653 and your total interest paid would be $1,395,089.
San Francisco Mortgage Rate Trends
Historical U.S. Mortgage Rates
The history of mortgage rates in the U.S. looks a bit like the path of a rollercoaster. Getting a sense of it can give you valuable perspective as you decide when to seek a mortgage in San Francisco. While interest rates have risen in recent years due to various economic factors, they are still below historical highs (in 1981, rates peaked at 18.63%). The chart shows how San Francisco’s average home loan rate compares to that of the nation as a whole. As you can see, while the city may be expensive, its loan rates have historically been below the national average. (The Federal Housing Finance Agency stopped compiling this city-level data after 2018.)
Year
San Francisco Rate
U.S. Rate
2000
6.78
8.14
2001
6.65
7.03
2002
5.96
6.62
2003
5.48
5.83
2004
5.41
5.95
2005
5.59
6.00
2006
6.50
6.60
2007
6.42
6.44
2008
6.16
6.09
2009
5.07
5.06
2010
4.82
4.84
2011
4.45
4.66
2012
3.63
3.74
2013
3.76
3.92
2014
3.87
4.24
2015
3.68
3.91
2016
3.48
3.72
2017
3.81
4.03
2018
4.23
4.57
Source: Federal House Finance Agency
Types of Mortgages Available in San Francisco, California
Every type of mortgage loan is available in San Francisco. Particularly if you’re new to home-buying, it’s helpful to familiarize yourself with these terms in advance:
Fixed-Rate Mortgage
Fixed-rate mortgages are the bedrock of home financing, offering you the security of a steady interest rate over the entire loan term. This, in turn, means your monthly payment amount for principal and interest will not change. These loans come in a variety of repayment schedules — 10, 15, 20, 30, or even 40 years — so you can choose the one that best fits your financial situation. Remember that the longer the term, the lower the monthly payment — but the more interest you will pay over the life of the loan. The appeal of fixed-rate mortgages is their stability and predictability.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) often start off with a lower interest rate than fixed-rate loans. But after an introductory period, your interest rate can adjust up or down with market conditions. This may be no big deal if you’re planning to sell before the fixed period ends. An ARM can also work in your favor if mortgage rates are on the decline. But before you opt into this unpredictable situation, it pays to run the numbers: What would your monthly payment look like if interest rates went up a point? What about two points, over time? It’s important to weigh what this would do to your budget.
FHA Loan
Supported by the Federal Housing Administration, FHA loans have more forgiving eligibility criteria than conventional loans. A minimum credit score of 580 is all that’s needed for a 3.5% down payment, making these loans a popular option for first-time homebuyers. And those with a credit score of 500 can still qualify, though they would need a down payment of 10%.
VA Loan
VA loans, backed by the U.S. Department of Veterans Affairs, are a great option for eligible active-duty military members, veterans, reservists, National Guard members, and surviving spouses. One of the most significant benefits of a VA loan is that it typically does not require a down payment, which can make homeownership more accessible. The first step in qualifying for a VA loan is to obtain a Certificate of Eligibility from the VA.
Jumbo Loan
In most of the U.S., the maximum loan limit for a conventional single-family home is $806,500 in 2025. San Francisco and other more expensive areas including Los Angeles and Orange counties have a limit of $1,209,750. Jumbo loans are for borrowers whose needs exceed that limit, and they are available in San Francisco for those looking to purchase higher priced properties. These loans may carry slightly higher interest rates than conventional loans, but they can still be competitive in the current market.
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 considering buying in San Francisco, you may be wondering if you should wait for mortgage rates to drop before diving into the market. Mortgage rates in San Francisco are not expected to change dramatically in 2025. The average rate is projected to end 2025 at around 6.30%. However, if rates do fall in the future, you can always consider a mortgage refinance.
Cost of Living in San Francisco
The cost of living in San Francisco is among the country’s highest. In other words, you won’t find this city on a list of best affordable places in the U.S. The housing market here is especially forbidding. Although the median home sale price is down from its 2022 peak, it stands at $1.4 million and the market is very competitive, with properties receiving an average of four offers. Despite the high cost of living in this specific area, securing a competitive mortgage rate in San Francisco can make homeownership more feasible for potential buyers looking to settle down in the city.
Here’s how San Francisco compares to other California cities on an index where 100 equals the average cost of living in the U.S.
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 San Francisco
To secure an advantageous mortgage rate in San Francisco, take good care of your credit score. Before you begin your home and mortgage search, check your credit report for any inaccuracies (mistakes do happen). And pay your bills on time without fail. Consider, too, how you might pay down some debt to reduce your debt-to-income (DTI) ratio, aiming for 36% or lower. And think about whether you can increase your down payment amount. Lenders also consider your income stability and assets. Going through the mortgage preapproval process can help you get a clear view of your budget. It also helps you compete for a seller’s attention in a market where many buyers are likely coming with cash offers.
A mortgage calculator can be your best friend when it comes to navigating home loan rates. You can experiment with numbers to see how different rates and loan terms might affect your monthly payments. But there are other helpful calculators as well. Here are our favorites:
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 San Francisco
Given how important it is to secure a competitive mortgage rate, you’ll want to obtain loan offers from multiple lenders and consider them side by side. Don’t just look at the interest rate you’re offered. Pay attention to the annual percentage rate (APR), which encompasses fees, closing costs, and mortgage points. Once you’ve found your best possible offer, consider locking in your rate for up to 90 days by paying a fee to the lender, especially if you’re concerned about potential rate hikes.
San Francisco 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. (As noted, 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), through its MyHome program, offers a variety of mortgage options and support, including down payment assistance programs and help with closing costs. Take time to explore these resources if you’re a first-time buyer or working with limited financial resources.
Closing Costs in San Francisco
Closing costs in San Francisco are generally about 2% to 5% of the loan value, but the actual amount will depend on the property’s value and location. The more expensive the property, the higher the closing costs. These costs will include common fees like loan origination, appraisal, and title insurance.
The Takeaway
The San Francisco mortgage market has many options for homebuyers. By staying informed about current mortgage rates and exploring available assistance programs, you can make smart decisions that align with your financial goals and set you up for successful homeownership in this busy city.
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.
What factors influence mortgage rates in San Francisco?
Mortgage rates in San Francisco, California are influenced by economic factors such as the bond market, inflation, and the housing market. But they are also impacted by the individual mortgage applicant’s credit score, down payment size, requested loan amount, debt-to-income ratio and more.
What’s the difference between a fixed-rate and an adjustable-rate mortgage?
With a fixed-rate mortgage, the interest rate remains constant over the life of the loan, which can be anywhere from 10 to 40 years. This means monthly principal-plus-interest payments are always the same. An adjustable-rate mortgage (ARMs) often starts with a lower initial rate, but after a period of time, which might stretch to five or even ten years, rates can adjust up or down within prearranged guidelines. This means that principal-plus-interest payments for an ARM can change over the course of the loan. Borrowers who want to understand how much of their monthly payment goes toward the principal vs. the interest should look at the amortization table for their loan.
Will San Francisco home prices ever drop?
A slight decline of less than 2% in San Francisco’s home prices was forecast for 2025 by Zillow. While this might not sound like much of a drop, it’s unusual for a large city and a market that has been as competitive as San Francisco’s.
How do mortgage interest rates work?
Mortgage interest rates are the cost of borrowing money, expressed as a percentage. These rates can be fixed or variable and are influenced by the borrower’s financial situation and the economic environment. Interest is a big part of your total loan cost, so it’s important to get a good rate.
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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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