Compare mortgage rates in Nebraska.

Introduction to Mortgage Rates

Nebraska’s mortgage landscape offers a range of options for homebuyers in search of a home loan. By staying informed about current mortgage rates, taking good care of their personal finances, and exploring homebuyer assistance programs, would-be homeowners can achieve successful homeownership in this friendly Midwestern state.

Where Mortgage Rates Come From

Mortgage rates are not set in stone but rather calculated using a complex combination of factors drawn from the state of the general economy and the borrower’s personal financial status.

How Interest Rates Affect Home Affordability

Mortgage rates have a noticeable impact on home affordability. For example, let’s say you’re looking to buy a $425,000 home with a 30-year fixed-rate mortgage and a down payment of 20%. If the interest rate is 5.50%, your monthly payment will be $1,930. But if the interest rate rises to 6.00%, your monthly payment will jump to $2,038. Over the life of the loan, you’ll pay almost $39,000 more interest for that half-percentage-point increase. That’s a significant amount of money that could be used for other things.

Should Homebuyers Wait for Interest Rates to Drop?

Particularly if you’re buying your first home, you may be wondering if you should buy now or wait for interest rates to come down. There’s no easy answer to this question. If you’re not in a hurry to buy a home, it may make sense to wait and see if interest rates drop. However, there’s no guarantee that rates will go down, and either interest rates or home prices (or both!) could even go up in the meantime.

If you’ve found a home that you love, it may be best to go ahead and buy it, even if the interest rate is a little higher than you’d like. You can always do a mortgage refinance later if rates come down.

Nebraska Mortgage Rate Trends

Understanding historical mortgage rates in the Cornhusker state can provide valuable insights. While rates nationwide have risen in recent years, they remain below historical highs. The average rate in Nebraska is sometimes slightly above the national average and sometimes below it, but it rarely deviates far from the national number. (The Federal Housing Finance Agency stopped tracking the state averages after 2018.)

Historical Interest Rates in Nebraska

Historical U.S. Mortgage Rates

For a broader perspective, it’s beneficial to examine historical U.S. mortgage rates. Over the past several decades, mortgage rates have experienced periods of both highs and lows, influenced by the various economic factors we explained above.

Factors Affecting Mortgage Rates in Nebraska

Economic Factors

•   The Federal Reserve:. The federal funds rate, governed by “the Fed”, serves as a benchmark for other interest rates, including mortgage rates. When the Fed’s interest rate is high, chances are mortgage rates will be too, as banks and other lenders use the federal funds rate as a benchmark when setting their own interest rates.

•   Inflation: When inflation rises, the Fed purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate.

•   Unemployment: When unemployment is low, the Fed might raise its benchmark rate to help prevent inflation. Mortgage rates then tend to rise. (A low unemployment rate may also lead to increased demand for housing, which puts upward pressure on home prices, further complicating things for buyers.)

Consumer Factors

•   Credit score: A higher credit score generally results in a lower mortgage interest rate.

•   Down payment: Increasing the down payment can reduce the mortgage interest rate.

•   Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback. To secure a borrower with solid income and assets, a lender might offer its most attractive rate.

•   Type of mortgage loan: Certain types of mortgages tend to have lower rates. For instance, adjustable-rate mortgages typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And shorter loan terms usually come with lower rates than longer terms (although the monthly payment may be higher with a shorter term).

Recommended: Average Monthly Expenses for One Person

Types of Mortgages Available in Nebraska

Various mortgage types — including fixed-rate, adjustable-rate, and government-backed loans — are available to meet the needs of different homebuyers in Nebraska.

Fixed-Rate Mortgage

Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) initially tend to offer a lower rate than fixed-rate loans. This can be beneficial if you’re planning to sell before the fixed-rate period ends, or if you can handle the uncertainty associated with a rate that might rise after the first few years.

An ARM is labeled with two numbers, such as a 5/1 ARM. The first is the number of the years in the introductory period (5, 7, and 10 year ARMS are the most common). The second is the period when the interest rate will reset. So a 5/1 ARM has a 5-year introductory period, followed by one adjustment per year. A 7/6 ARM has a 7-year introductory period, followed by interest rate adjustments every 6 months.

FHA Loan

Backed by the Federal Housing Administration, FHA loans typically have more lenient eligibility requirements than conventional loans because the FHA’s backing helps reduce the risk to lenders.

VA Loan

VA loans, backed by the U.S. Department of Veterans affairs, are available to qualifying veterans, active-duty military members, Reserve and National Guard members, as well as surviving spouses. One of the most attractive things about VA loans is that they do not require a down payment.

USDA Loan

USDA loans are designed for borrowers who earn below a specific income limit and who are looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture. If you are eligible, one perk of these mortgages is that private mortgage insurance (PMI) is not required.

Jumbo Loan

Conventional mortgage loans have a cap of $832,750 for a single-family home. Jumbo loans are conventional loans that exceed this amount. In very expensive markets, such as Hawaii, the conventional loan cap can be up to $1,249,125, but throughout Nebraska it is $832,750.

Popular Places to Get a Mortgage in Nebraska

Securing a mortgage often depends on choosing the right location, where home prices are affordable, the cost of living is low, mortgage terms are favorable — or all of the above. In recent years, Nebraska has seen a growing population in the “exurbs” of large cities such as Omaha and Lincoln. Population growth was significant in Plattsmouth, Valley, Fremont, and Ashland, for example. Here are some of the least and most expensive places to get a mortgage in the state:

Least Expensive Locations

Nebraska’s place in the cost of living in the U.S. rankings is on the affordable side. The following are some of the least expensive places to get a mortgage in Nebraska:

•   Kearney, with a cost of living 14 points below the national average, is also a good choice for those looking for an affordable home purchase.

•   Lexington is not far from Kearney and is one of the most affordable places in the state, with a cost of living 20 points below the U.S. average.

Small cities tend to offer lower home prices and more affordable mortgage rates than the larger cities in Nebraska. However, they may have fewer housing options and less diverse economies.

Most Expensive Locations

The following are some of the most expensive places to get a mortgage in Nebraska:

•   Omaha ranks near the top of priciest cities in Nebraska but it is still below the U.S. national average cost of living.

•   Lincoln, like Omaha, is more expensive by Nebraska standards but cheaper than the national average.

•   Bellevue is the most expensive city in Nebraska.

These cities offer higher home prices and more expensive mortgage rates than the rest of the state. However, they also have strong economies and job markets, which makes them attractive places to live and work.

Recommended: Best Affordable Places in the U.S.

Tips for Securing a Competitive Mortgage Rate in Nebraska

A competitive mortgage rate is crucial for saving money over the life of a loan. Here are a few tips for securing a competitive mortgage rate in Nebraska:

Compare Interest Rates and Fees

Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan and factor those into your calculations.

Get Preapproved

Going through the mortgage preapproval process and getting an approval letter from a lender strengthens your position as a buyer and allows you to move quickly when you find the right property. If you’re worried about interest rates rising, you can pay a fee to the lender to lock in your rate for up to 90 days.

Nebraska Mortgage Resources

Nebraska offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources.

First-Time Homebuyer Programs

The First Home
program can help those who qualify as a first-time homebuyer in Nebraska. The state’s Welcome Home program can help both first-time and repeat buyers who fall within certain income limits. First-timers will be required to take a homebuyer education program before the closing.

Down Payment Assistance

Down-payment assistance programs can give homebuyers in Nebraska a leg up as well. Check into the Nebraska Homebuyer Assistance Program
.

Tools & Calculators

The following tools and calculators can help homebuyers in Nebraska:

Refinancing Options in Nebraska

A mortgage refinance can be a smart way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity. Here are a few refinancing options available in Nebraska:

FHA Streamline Refinance

The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. This type of refinance does not require a new appraisal or credit check, making it a quick and easy way to lower your interest rate.

VA Streamline Refinance

This interest-rate reduction refinance loan (IRRRL) can reduce the monthly payments on VA loans by adjusting the APR. IRRRLs do not require a new appraisal or credit check, making them a convenient option for VA loan holders looking to lower their interest rate.

Cash-Out Refinance

With a cash-out refi, you take out a new mortgage for a larger amount than what you have left on your current mortgage and receive the excess as cash. You can use the cash for remodeling, debt consolidation, or paying for college costs.

Closing Costs, Taxes, and Fees in Nebraska

Buyers in Nebraska can expect to pay between 2%-6% of the home’s purchase price in closing costs. Closing costs include a variety of fees, such as the loan origination fee, appraisal fee, title insurance, and recording fees. These costs vary depending on the lender, the loan amount, and the property location.

The Takeaway

Nebraska’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make informed decisions that align with their goals and feel comfortable about their finances while settling into a new home.

FAQ

Will mortgage rates drop in Nebraska?

It is difficult to predict whether mortgage rates will drop in Nebraska. Mortgage rates are influenced by a variety of factors, including the federal funds rate, inflation, and the unemployment rate — not to mention a borrower’s personal financial profile.

Will mortgage rates ever go back to normal?

Don’t focus on “normal” — just look for a home and a mortgage you can afford. Normal is a relative term, and mortgage rates have fluctuated significantly over the years.

Will Nebraska home prices ever drop?

It is difficult to predict whether Nebraska home prices will drop — so much depends on the local housing market, both supply and demand. If you truly need to move and you feel prices are high, search out a trusted real estate agent to ask for the inside scoop on the market you’re interested in.

Is it a good time to buy a house in Nebraska?

Whether it is a good time to buy a house in Nebraska depends on your individual circumstances. If you are financially stable and have a good credit score, you may be able to get a good interest rate on a mortgage. However, if you are not sure about your financial future, it may be best to wait before buying a house.

How do I lock in a mortgage rate?

You can lock in a mortgage rate by getting a mortgage rate lock from a lender. A mortgage rate lock guarantees that you will get a specific interest rate on your mortgage for a certain period of time. This can protect you from rising interest rates.

How do mortgage interest rates work?

Mortgage interest rates are determined by a variety of factors, including the federal funds rate, inflation, and the unemployment rate. When these factors change, mortgage interest rates could also change. Mortgage interest rates are also affected by the borrower’s credit score, down payment, and loan amount, among other personal factors.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*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.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-082

Compare mortgage rates in South Carolina.

Introduction to Mortgage Rates

If you’re on the hunt for a home loan in South Carolina, you’ll have a range of options. Making the smartest pick requires an understanding of current mortgage rates and available homebuyer assistance programs. This comprehensive guide delves into the factors influencing mortgage rates in South Carolina, explores various mortgage types, and provides tips for securing a competitive mortgage rate in the Palmetto State.

Mortgage rates are determined by both your personal financial status and larger economic factors. Economic factors that influence mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate. On the borrower’s side, credit score, down payment, income and assets, and the type of mortgage loan all play a role in determining the interest rate offered.

Where Mortgage Rates Come From

The Fed, formally known as The Federal Reserve, sets short-term interest rates that serve as benchmarks for other interest rates, including mortgage rates. When the Fed lowers interest rates, mortgage rates typically follow suit, making it more affordable for homebuyers to borrow money. And when the Fed raises rates, you can probably guess what happens next.

How Interest Rates Affect Home Affordability

If you’re buying your first home and it feels like a lot is riding on mortgage interest rates, you’re not wrong. A small interest rate shift can significantly affect the monthly mortgage payment and the overall cost of a home loan. For instance, a $200,000 loan with a 30-year term and a 4.00% interest rate would result in a monthly payment of $954. If the interest rate increases by just 1% to 5.00%, the monthly payment jumps to $1,073, adding an extra $42,774 in interest paid over the life of the loan.

Should Homebuyers Wait for Interest Rates to Drop?

First-time homebuyers, especially, often face the dilemma of whether or not to wait for interest rates to drop before purchasing a home. Rates can fluctuate, but waiting too long may result in missing out on a desirable property or facing rising home costs (or rising rents). If it feels like the time is right to buy and you can afford to do so, remember that you can explore a mortgage refinance if rates drop in the future.

South Carolina Mortgage Rate Trends

Looking at historical mortgage rate trends in South Carolina, shown below, might give prospective homeowners a sense of what’s in store. While rates have experienced fluctuations over the years, they currently hover around the 50-year average. (The Federal Housing Finance Agency stopped reporting state averages in 2018.)

Historical U.S. Mortgage Rates

As you’ll see below, rates have generally trended downward since the early 1980s. Although today’s homebuyers may be concerned about interest rates, the current rates are relatively low compared to historical averages.

Factors Affecting Mortgage Rates in South Carolina

As noted above, some of these factors affecting mortgage rates are economic, while others are wholly within the homebuyer’s control. Let’s have a closer look:

Economic Factors

•   The benchmark rateset by the Federal Reserve has an impact on other interest rates, including those charged by companies offering mortgages. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates.

•   Inflation, which increases the cost of living, can make it more expensive for lenders to lend money and devalue the money they do lend. To make up for this, lenders may increase interest rates.

•   The unemployment rate, in turn, is a factor that may indirectly affect mortgage rates because when unemployment is high, the Fed often reduces its benchmark rate to try to spark job creation. Mortgage rates then tend to fall.

Consumer Factors

•   Credit score is a numerical representation of an individual’s creditworthiness and one of the things a lender will examine during the mortgage preapproval process. Your score is based on factors such as payment history, credit utilization, and length of credit history. A higher credit score indicates a lower risk of default, and individuals with higher credit scores typically qualify for lower mortgage interest rates.

•   The down payment is the upfront payment made by the homebuyer. A larger down payment reduces the loan amount that the borrower needs to secure, making the loan less risky for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.

•   Income and assets are other factors lenders examine to determine your ability to repay the mortgage. Borrowers with stable employment and a healthy financial cushion are more likely to secure favorable mortgage rates.

•   The type of mortgage loanyou select can impact the interest rate offered. Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages, for example. The Consumer Financial Protection Bureau notes that shorter loan terms typically have lower interest rates, although the monthly payment amounts may be higher.

Recommended: Average Monthly Expenses for One Person

Types of Mortgages Available in South Carolina

South Carolina offers a diverse range of conventional and government-backed mortgages to cater to the needs of different homebuyers. Here are the most common types of mortgage loan:

Fixed Rate Mortgage

Fixed-rate mortgages provide peace of mind with a consistent interest rate throughout the entire loan term. This stability allows homebuyers to accurately budget their monthly mortgage payments and plan for the future without worrying about fluctuating rates.

Most people sign up for a 30-year loan term, although shorter terms are available. A 10- or 15-year term will result in higher monthly payments than a 30-year loan, but allow for faster payoff of the loan and lower total interest paid.

Adjustable Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) are characterized by an initial period of lower interest rates, followed by periodic adjustments based on a predetermined index. This initial period, known as the fixed-rate period, can range from one to 10 years.

The lower initial interest rate of ARMs can be advantageous for homebuyers who plan to sell their property before the fixed-rate period ends. However, it’s important to carefully consider the potential for future rate increases and ensure that the ARM aligns with long-term financial goals.

FHA Loans

FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with less-than-perfect credit or limited down payment funds. FHA loans typically have more lenient eligibility requirements compared to conventional loans, making them a viable option for first-time homebuyers or underwhelming credit scores.

The Federal Housing Administration insures FHA loans, providing lenders with a safety net in case of borrower default. This insurance reduces the risk for lenders and allows them to offer FHA loans with more favorable terms, such as lower down payment requirements and potentially lower interest rates.

VA Loans

One of the most significant advantages of VA loans is the elimination of the down payment requirement. This feature makes homeownership more attainable for those who may not have the funds for a substantial down payment.

USDA Loans

USDA loans, provided by the United States Department of Agriculture, are tailored to borrowers whose household income falls below a certain level and who are seeking to purchase a home in a rural area. These loans offer favorable terms, including no down payment requirement, competitive interest rates, and flexible credit guidelines.

Jumbo Loans

Conventional mortgage loans typically have a maximum lending limit set by the Federal Housing Finance Agency (FHFA). For 2026, the conforming loan limit for a single-family home in most parts of the country (and all of South Carolina) is $832,750. Loans that exceed this amount are considered jumbo loans.

Recommended: The Best Affordable Places in the U.S.

Popular Places to Get a Mortgage in South Carolina

When searching for a home, location plays a crucial role in the cost of living in the U.S. — including home prices and mortgage costs. South Carolina offers a diverse range of cities and towns that cater to different budgets and preferences.

The cost of living in an area significantly impacts housing affordability. The Cost of Living Index (COLI) provides a comparison of the cost of living in different states relative to the national average. South Carolina has a relatively low COLI, making it an attractive option for homebuyers seeking affordability.

Least Expensive Locations

Some of the most affordable places to purchase a home in South Carolina include:

•   Spartanburg: The average home value here is $221,227, according to Zillow, well below the national average, which tops $360,000.

•   Beaufort: Homes average $401,750 in this island locale near Charleston.

•   Fountain Inn: A historic town not far from the larger Columbia, Fountain Inn has an average home value of $291,785.

•   Batesburg-Leesville: Average home value here is just over $155,000, very reasonable — especially given the proximity to the larger city of Columbia.

•   Georgetown: This is a welcoming beach community with an average home value of $263,243.

Most Expensive Locations

The most expensive places to purchase a home in South Carolina tend to be beach communities, including Kiawah Island, where the average home value is $1,943,246 and Hilton Head, where homes average $765,077.

Tips for Securing a Competitive Mortgage Rate in South Carolina

Obtaining a competitive mortgage rate can significantly reduce the overall cost of borrowing. As we’ve seen, even a small difference in interest rate can result in substantial savings over the life of the loan.

Compare Interest Rates and Fees

Shopping around for mortgage rates is essential to ensure you’re getting the best deal. Don’t settle for the first offer you receive. Compare multiple lenders to find the most competitive option, and make sure to include upfront costs and closing fees in your comparison.

Get Preapproved

Obtaining preapproval for a mortgage puts you in a stronger position when making an offer on a property. It demonstrates to sellers that you’re a serious buyer and can secure financing. Preapproval (not to be confused with prequalification, an earlier step in the process) also allows you to move quickly when you find the right property, as you’ll already have a clear understanding of your borrowing power.

Take Advantage of South Carolina Mortgage Resources

South Carolina provides a range of programs to support homebuyers, especially first-time buyers and those facing financial constraints. These resources include:

First-Time Homebuyer Programs

South Carolina offers several programs tailored to first-time homebuyers, including:

•   The South Carolina Housing Finance and Development Authority (SCHFADA) offers a variety of loan programs, including the First-Time Homebuyer Program, which provides low-interest loans and down payment assistance.

•   The USDA Rural Development Guaranteed Rural Housing Loan Program provides no-down-payment loans to eligible borrowers in rural areas.

•   The Federal Housing Administration (FHA) offers FHA loans with flexible credit requirements and low down payment options.

Down Payment Assistance Programs

South Carolina offers forgivable down payment assistance to all qualified homebuyers. The home must be occupied for 15 years before the payment is fully forgiven.

Tools & Calculators

Before you get serious about a home search in South Carolina, take advantage of these helpful tools to help set your home-buying budget, determine your down payment amount, and get a sense of what your monthly mortgage payment might be.

Refinancing Options in South Carolina

In addition to conventional refinancing options, homeowners with FHA-insured loans may benefit from the FHA Streamline Refinance program. This program allows borrowers to refinance their existing FHA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.

VA loan holders may consider the Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly payments. This program allows eligible borrowers to refinance their VA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.

Closing Costs, Taxes, and Fees in South Carolina

Closing costs associated with purchasing a home in South Carolina typically range between 3% and 6% of the purchase price. These costs may include loan origination fees, appraisal fees, title insurance, and other administrative charges.

The specific closing costs in South Carolina can vary depending on the value of the property and its location. Higher-priced properties and those located in certain areas may incur higher closing costs.

The Takeaway

South Carolina’s mortgage market provides a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve their dream of homeownership in the Palmetto State.

FAQ

Will mortgage rates drop in South Carolina?

Predicting future mortgage rate movements is challenging. Your best bet is to keep in close contact with a mortgage lender you trust, who is likely to be watching the rates even more closely than you are.

Will mortgage rates ever go back to normal?

The only thing “normal” about mortgage rates is that they are ever-changing. Mortgage rates have fluctuated throughout history because they are influenced by economic factors, and there isn’t really a specific level considered normal.

Will South Carolina home prices ever drop?

Real estate markets are subject to many factors that influence home prices. While prices in South Carolina have generally appreciated over time, there can be periods of market fluctuation or correction. Predicting future price movements is difficult, however.

Is it a good time to buy a house in South Carolina?

The best time to buy a home is when it feels right for you. There is no one-size-fits-all answer. Examine the inventory (and prices) of available homes, consider your personal financial situation, and weigh your long-term goals to make an informed decision.

How do I lock in a mortgage rate?

Locking in a mortgage rate involves securing a commitment from a lender to provide a specific interest rate for a certain period. This can be done by obtaining a rate lock agreement, which sometimes means paying a fee. The length of the rate lock can vary and should be discussed with the lender.

How do mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. Lenders determine interest rates based on various factors, including the borrower’s credit score and loan term; however, rates are also guided by prevailing economic conditions. Your interest rate governs both your monthly mortgage payment amount and the total amount of interest you’ll pay over the life of the loan.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*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.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-095

Compare mortgage rates in Texas.

Introduction to Mortgage Rates

The Lone Star State presents a range of mortgage options for homebuyers. Mortgage rates are determined by a complex combination of economic factors and the borrower’s financial status. These factors can be broadly categorized into two buckets: the state of the economy and the borrower’s financial health.

On the borrower’s side, credit score, down payment, income, assets, and the type of home loan all play a role in determining the interest rate offered. A higher credit score, larger down payment, steady income, and valuable assets can lead to lower mortgage rates. This deep dive into mortgage rates explores how they’re set, how borrowers can reduce the rate they’re offered, and state resources for first-time borrowers and repeat homebuyers.

Where Mortgage Rates Come From

The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use as a benchmark. Although home loan rates aren’t directly tied to Fed rates, they generally follow the same economic trends.

When the Fed’s interest rate is high, chances are mortgage rates will be too. This is because banks borrow money from the Fed at the federal funds rate and then lend it to consumers at a higher rate, which includes a profit margin for the bank.

How Interest Rates Affect Home Affordability

If you’re buying your first home, pay close attention: Mortgage rates have a more significant impact on home affordability than many people realize. Even small changes in interest rates can make a big difference in the amount of money a borrower needs to qualify for a mortgage and the size of their monthly payments.

For example, a $300,000 mortgage with a 4.5% fixed interest rate for 30 years would result in a monthly payment of $1,520. If the interest rate increases by just 1 percentage point to 5.5%, the monthly payment jumps to $1,703 — a difference of $183 per month.

Over the life of the loan, the higher interest rate would add up to a total of $65,992 in additional interest paid. This illustrates how even a small increase in interest rates can make a significant difference in the overall cost of a mortgage.

Should Homebuyers Wait for Interest Rates to Drop?

Many first-time homebuyers wonder if they should buy now or wait for interest rates to come down. While it’s impossible to predict the future, there are a few factors to consider when making this decision.

First, it’s important to remember that mortgage rates are cyclical and have historically fluctuated over time. While rates may be higher at the moment, there’s no guarantee that they will drop in the near future. Waiting too long could mean missing out on the opportunity to purchase a home at a favorable price.

Second, homeowners can always refinance their mortgage after rates come down. A mortgage refinance involves taking out a new loan with a lower interest rate to replace the existing mortgage. This can help borrowers save money on their monthly payments and reduce the overall cost of their loan.

Texas Mortgage Rate Trends

Understanding historical mortgage rates can provide valuable insights into where rates are headed. Over the 20-year period covered by the chart below, mortgage rates in Texas ranged from a low of 3.59% in 2012 to a high of 8.03% in 2000. While rates have risen in recent years, they remain below historical highs. Indeed, they are currently around the 50-year average.

Historical U.S. Mortgage Rates

For a broader perspective, it’s helpful to consider historical U.S. mortgage rates. The average 30-year fixed mortgage rate in the United States has followed a similar trend to Texas, with rates rising in recent years but remaining below historical highs.

According to Freddie Mac, the average 30-year fixed mortgage rate in the U.S. was 6.09% in September 2024. This is higher than the record low of 2.65% reached in January 2021 but much lower than the peak of 18.63% reached in 1981.

Factors Affecting Mortgage Rates in Texas

Many factors influence mortgage rates in Texas and nationwide. Some of these factors are economic, but others are entirely within the homebuyer’s control.

Economic Factors

Economic factors that affect mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate.

•   The Feds sets the short-term interest rates that banks use as a benchmark for setting mortgage rates. When the Fed’s interest rate is high, mortgage rates tend to be higher as well.

•   Inflation, or the rate at which prices increase over time, can also impact mortgage rates. When inflation is high, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate for the loss of purchasing power.

•   The unemployment ratealso plays a role in mortgage rates. Lower unemployment can result in higher mortgage rates. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.

Consumer Factors

On the consumer side, factors such as credit score, down payment, income, assets, and the type of mortgage loan can all influence the interest rate offered by lenders.

•   Credit score: A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. As a result, lenders are more likely to offer lower interest rates to borrowers with high credit scores.

•   Down payment: A larger down payment reduces the amount of money that the borrower needs, which lowers the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.

•   Income and assets: A steady income and valuable assets indicate a borrower’s ability to repay the loan, making them more attractive to lenders. As a result, lenders may offer lower interest rates to borrowers with stable income and assets.

•   Type of mortgage loan: Different types of mortgage loans have different interest rate structures. For example, adjustable-rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages, but the interest rate can adjust over time. Government-backed loans, such as VA loans and FHA loans, may also have lower interest rates than conventional loans.

Types of Mortgages Available in Texas

Various types of mortgage loans — including fixed-rate, adjustable-rate, FHA, VA, and USDA loans — are available to meet the needs of different homebuyers in Texas.

Conventional loans, which are not backed by the government, can be fixed-rate or adjustable-rate. Fixed-rate loans offer a stable interest rate throughout the life of the loan, while adjustable-rate loans have an initial fixed rate that adjusts after a certain period. Government-backed loans, such as FHA, VA, and USDA loans, are available to specific groups of borrowers and may have more favorable terms and lower interest rates than conventional loans.

Fixed-Rate Mortgage

Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. This type of mortgage provides stability and predictability in monthly payments, making it a good option for borrowers who prefer certainty and want to lock in a low interest rate.

Fixed-rate mortgages are available with repayment terms of 10, 15, 20, or 30 years. The longer the loan term, the lower the monthly payments will be, but the more interest the borrower will pay over the life of the loan.

For example, a $300,000 fixed-rate mortgage with a 30-year term and an interest rate of 6.92% would result in a monthly payment of $1,979. If the same loan had a 15-year term, the monthly payment would be $2,353, but the total interest paid over the life of the loan would be significantly lower: $198,387 less!

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) initially offer a lower interest rate than fixed-rate loans. This can be beneficial for borrowers who plan to sell their home or refinance before the fixed-rate period ends.

However, ARMs come with the risk that the interest rate can increase after the initial fixed-rate period, which can lead to higher monthly payments. The interest rate on an ARM is typically adjusted every 6 months or a year.

For example, a $300,000 ARM with a 5-year fixed-rate period and an initial interest rate of 4.5% could have a monthly payment of $1,520 during the fixed-rate period. However, after the fixed-rate period ends, the interest rate could adjust to a higher rate, such as 6.5%, resulting in a monthly payment of $1,896.

FHA Loan

FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible for borrowers with lower credit scores and smaller down payments.

FHA loans require a minimum credit score of 580 for a 3.5% down payment or 500 for a 10% down payment. The maximum loan amount for FHA loans in Texas is $524,225 for a single-family home.

FHA loans have less stringent credit and income requirements compared to conventional loans, making them a good option for first-time homebuyers or borrowers with less-than-perfect credit.

VA Loans

VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members, and surviving spouses. VA loans offer competitive interest rates and do not require a down payment.

VA loans are backed by the U.S. Department of Veterans Affairs (VA) and are available to eligible borrowers with a valid Certificate of Eligibility (COE). The VA does not set a maximum loan amount, but lenders may have their own limits.

VA loans also have competitive interest rates and do not charge mortgage insurance, which can save borrowers money over the life of the loan. However, there is a one-time funding fee that is paid either at closing or rolled into your mortgage balance. A first-time VA loan borrower with a 0% down payment would pay a 2.15% funding fee.

USDA Loans

USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. USDA loans offer competitive interest rates and do not require a down payment.

USDA loans are backed by the U.S. Department of Agriculture (USDA) and are available to eligible borrowers in designated rural areas. The USDA does not set a maximum loan amount, but lenders may have their own limits.

USDA loans also have competitive interest rates and do not charge mortgage insurance, which can save borrowers money over the life of the loan. USDA loans do require a 1% upfront guarantee fee and a 0.35% annual guarantee fee, based on the remaining principal balance each year.

Jumbo Loans

Jumbo loans are conventional loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In Texas, the conforming loan limit for a single-family home is $832,750. Anything above that requires a jumbo mortgage.

Jumbo loans are not backed by the government and may have higher interest rates and stricter credit requirements than conforming loans. However, jumbo loans can be an option for borrowers who need to borrow more than the conforming loan limit.

Recommended: Cost of Living in the U.S.

Popular Places to Get a Mortgage in Texas

Securing a mortgage often depends on choosing the right location, where the home prices, cost of living, and mortgage terms are affordable.

The cost of living refers to the average monthly expenses for one person, which varies wildly from urban and suburban neighborhoods to rural areas, and from state to state. Texas offers a variety of cities and towns that cater to different home buyers’ needs and budgets. Some popular places to get a mortgage in Texas include:

•   Austin: Austin is a vibrant city known for its tech industry, music scene, and outdoor activities. The average home value in Austin is $527,213.

•   Dallas: Dallas is a major business and cultural center in Texas. The average home value in Dallas is $313,158.

•   Houston: Houston is a diverse city with a strong economy and a large job market. The average home value in Houston is $266,515.

•   San Antonio: San Antonio is a historic city with a rich culture and a growing economy. The average home value in San Antonio is $255,778.

These cities offer a range of housing options, from affordable starter homes to luxury properties, and have a variety of lenders and mortgage brokers to help homebuyers secure financing.

Least Expensive Locations

For homebuyers looking for more affordable housing options, there are several cities in Texas with lower median home prices.

•   El Paso: The average home value in El Paso is $223,427, making it one of the most affordable cities in Texas.

•   Brownsville: Brownsville is another affordable city in Texas, with an average home value of $186,700.

•   McAllen: McAllen is located in the Rio Grande Valley and has an average home value of $223,755.

•   Laredo: Laredo is another city in the Rio Grande Valley with an average home value of $209,111.

These cities offer lower housing costs and may be a good option for first-time homebuyers or those on a tight budget.

Tips for Securing a Competitive Mortgage Rate in Texas

A competitive mortgage rate can save you thousands of dollars over the life of your loan. Here are a few tips for securing a competitive mortgage rate in Texas:

Compare Interest Rates and Fees

Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs and closing fees associated with the loan.

Get Preapproved

Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. If you’re worried about interest rates rising, you can pay a fee to the lender to lock in your rate for up to 90 days. Just be aware that the mortgage preapproval process can take up to ten days.

Improve Your Credit Score

A higher credit score can lead to a lower mortgage interest rate. Pay your bills on time, reduce your debt, and avoid opening new credit accounts before applying for a mortgage.

Make a Larger Down Payment

A larger down payment can lower your mortgage interest rate. If you can afford it, try to make a down payment of at least 20% of the purchase price.

Consider a Shorter Loan term

Shorter loan terms typically have lower interest rates than longer loan terms. If you can afford it, opt for a 15-year mortgage instead of a 30-year mortgage.

By following these tips, you can increase your chances of securing a competitive mortgage rate in Texas and saving money on your home purchase.

Texas Mortgage Resources

Texas offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources.

•   Texas Department of Housing and Community Affairs (TDHCA): The TDHCA offers a variety of programs to help Texans buy homes, including down payment assistance, closing cost assistance, and mortgage credit certificates.

•   Texas Veterans Land Board (VLB): The VLB offers low-interest loans to eligible veterans, active-duty military members, and their families.

•   USDA Rural Development: USDA Rural Development offers a variety of programs to help rural Texans buy homes, including direct loans, guaranteed loans, and home improvement loans.

These resources can provide valuable assistance to homebuyers in Texas, making it easier to achieve their dream of homeownership.

First-Time Homebuyer Programs

Texas offers several programs to help those who qualify as a first-time homebuyer to overcome the challenges of buying a home.

•  My First Texas Home
My First Texas Home

•  Homes for Texas Heroes
Homes for Texas Heroes

Down Payment Assistance

Down payment assistance can help homebuyers overcome one of the biggest challenges of buying a home.

•  My Choice Texas Home

•  Home Sweet Texas Home
Home Sweet Texas Home

Tools & Calculators

There are a variety of tools and calculators available to help homebuyers estimate their monthly mortgage payments, compare interest rates, and make other important decisions.

Refinancing Options in Texas

Refinancing a mortgage can be a smart way to lower your monthly payments, get a lower interest rate, or cash out some of your home equity.

•   FHA Streamline Refinance: The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle.

•  VA Interest-Rate Reduction Refinance Loan: The VA IRRRL can reduce the monthly payments on VA loans by adjusting the APR.

•  Conventional refinance: Conventional refinance loans are available to homeowners who do not have FHA or VA loans. Conventional refinance loans can offer lower interest rates than FHA or VA loans.

Refinancing can be a complex process, so it’s important to talk to a mortgage lender to see if it’s right for you.

Closing Costs, Taxes, and Fees in Texas

Buyers in Texas can expect to pay between 2% and 5% of the home’s purchase price in closing costs. That includes the following required costs:

•  Title insurance: Title insurance protects the lender against any claims against the title to the property.

•  Recording fees: Recording fees are paid to the county to record the deed and mortgage.

•  Transfer taxes: Transfer taxes are paid to the state when the property is transferred from the seller to the buyer.

•  Loan origination fee: The loan origination fee is a fee charged by the lender for processing the loan application.

•  Appraisal fee: The appraisal fee is paid to an appraiser to determine the value of the property.

Closing costs can vary depending on the lender and the purchase price of the home. It’s important to factor closing costs into your budget when buying a home.

The Takeaway

Texas’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership.

FAQ

What is a mortgage rate?

A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest that borrowers will pay over the life of the loan.

Will mortgage rates drop in Texas?

Predicting future interest rate movements is challenging, and there is no guarantee that rates will drop. Homebuyers should make decisions based on their current financial situation and housing needs rather than speculating on future interest rate changes.

Will mortgage rates ever go back to normal?

“Normal” depends a lot on how far your memory goes back. Mortgage rates have fluctuated throughout history and are influenced by various economic factors. It is difficult to predict when or if rates will return to a specific level. But by some measures, rates are normal now.

Will Texas home prices ever drop?

Real estate market conditions, including home prices, are influenced by supply and demand, economic factors, and local market dynamics. Texas is a big state, and there is no guarantee that prices will drop in a particular area.

Is it a good time to buy a house in Texas?

The decision of whether to buy a house depends on individual circumstances and preferences. Factors such as financial readiness, housing needs, and market conditions should be carefully considered when making this decision.

How to lock in a mortgage rate?

Borrowers can lock in their mortgage rate by getting preapproved for a mortgage. This process involves providing the lender with information about their financial situation and credit history. Once preapproved, the lender will provide a commitment letter that locks in the interest rate for a specified period.

How do mortgage interest rates work?

Mortgage interest rates are determined by various factors, including the overall economy, the Federal Reserve’s monetary policy, and the supply and demand for mortgage loans. Lenders consider these factors when setting the interest rates they offer to borrowers.

SoFi Mortgages
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*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.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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