Compare mortgage rates in South Dakota.

Introduction to Mortgage Rates

Obtaining a mortgage is a crucial step in the homebuying process, and understanding how mortgage interest rates are determined is essential for making informed financial decisions. Mortgage rates are not static; they fluctuate based on various economic indicators and the borrower’s financial profile. Before you begin looking for a home and a mortgage in South Dakota, study this guide so you — and your finances — are prepared.

Where Do Mortgage Rates Come From?

Mortgage rates are determined by a complex interplay of factors that can be broadly categorized into two groups: the state of the economy and the individual borrower’s financial status. Economic factors include the Federal Reserve’s interest rate decisions, inflation, and unemployment rates.

While these economic factors are not within the individual borrower’s control, the borrower’s personal financial profile also plays a significant role in determining what mortgage interest rate they’re offered for their specific home loan. We’ll dig into that further below.

How Interest Rates Affect Home Affordability

Mortgage rates have a significant impact on home affordability, even more so than many people realize. Even a small change in the interest rate can make a substantial difference in the monthly mortgage payment and the overall cost of the loan. For many middle-income Americans in recent years, a combination of rising home prices and increasing mortgage rates has put homeownership out of reach.

Should Homebuyers Wait for Interest Rates to Drop?

Many homebuyers wonder whether they should get into the market or wait for interest rates to come down. While it’s tempting to wait for a more favorable rate, it’s important to remember that predicting interest rate movements is notoriously difficult. Rates can remain high for an extended period, or they may drop but then rise again.

Moreover, sitting out when you are buying your first home means you will delay building equity. You also risk the possibility that home prices could increase further while you are waiting for mortgage rates to drop.

If you are nervous about waiting, remember that you could always think about a mortgage refinance in the future. If rates drop after you purchase your home, you can work with a lender to determine whether refinancing would reduce your monthly payments.

Recommended: Average Monthly Expenses for One Person

South Dakota Mortgage Rate Trends

Taking a look at the historical mortgage rate trends in South Dakota and nationally can provide insights into present-day rates. As you can see below, South Dakota’s average rate is typically below the U.S. average. This is in keeping with the cost of living in the state, which is virtually the lowest in the country (only Arkansas has a lower cost of living).

Historical U.S. Mortgage Rates

Looking at the average U.S. mortgage rate over several decades also provides perspective. Even if rates feel high in the present, they aren’t in the double-digit territory they were back in the 1980s.

Factors Affecting Mortgage Rates in South Dakota

Let’s take a look at the two buckets of factors that influence mortgage rates. As mentioned above, they are economic and consumer factors.

Economic Factors

The South Dakota mortgage market is influenced by the same economic factors that affect mortgage rates nationwide. These include:

•   The Federal Reserve: The Fed’s monetary policy decisions have a direct impact on mortgage rates. When the Fed lowers rates, mortgage rates tend to follow.

•   Inflation: Rising inflation can lead to higher mortgage rates, as lenders adjust their rates to compensate for the reduced purchasing power of money.

•   Unemployment: High unemployment may lead the Fed to lower rates to try to spark job creation. (However, a low unemployment rate, indicative of a strong economy, can mean increased demand for housing.)

Consumer Factors

In addition to economic factors, several consumer-specific factors also influence mortgage rates in South Dakota:

•   Credit score: A higher credit score generally results in a lower mortgage interest rate, as it indicates a lower risk of default for the lender.

•   Down payment: Increasing the down payment can trigger a lower mortgage interest rate, as it reduces the loan amount and demonstrates the borrower’s financial commitment.

•   Income and assets: A steady income and sufficient assets provide reassurance to lenders that the borrower can meet the mortgage payments even in challenging circumstances.

•   Type of mortgage loan: Certain types of mortgages, such as adjustable-rate mortgages (ARMs) and government-backed loans, may have different interest rates compared to conventional fixed-rate mortgages.

Types of Mortgages Available in South Dakota

Homebuyers in South Dakota have access to various mortgage types, each with its own characteristics and benefits. These include:

Fixed-Rate Mortgage

A fixed-rate mortgage offers a consistent interest rate throughout the life of the loan, providing stability and predictability in monthly payments. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage (ARM) initially offers a lower interest rate compared to a fixed-rate mortgage. However, the interest rate can fluctuate over time, typically based on a financial index. ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends.

FHA Loans

Backed by the Federal Housing Administration (FHA), FHA loans are designed to make homeownership more accessible for borrowers with limited financial resources. FHA loans typically have more lenient credit and income requirements compared to conventional loans.

VA Loans

VA loans are available to eligible veterans, active-duty military members, Reserve and National Guard members, and surviving spouses. VA loans offer competitive interest rates and do not require a down payment, making them an attractive option for borrowers. To determine if they might be eligible for a VA loan, borrowers apply to the VA for a Certificate of Eligibility.

USDA Loans

USDA loans are designed for borrowers with income below a certain threshold who are looking to purchase a home in a rural area. USDA loans are backed by the U.S. Department of Agriculture (USDA) and offer competitive interest rates with no down payment requirement.

Jumbo Loans

Jumbo loans are conventional mortgage loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In South Dakota, as in most of the U.S., the conforming loan limit for a single-family home is $832,750. Borrowers who need a mortgage above this limit should seek out a jumbo loan and may have to meet stricter eligibility requirements.

Popular Places to Get a Mortgage in South Dakota

Securing a mortgage often depends on choosing the right location, where home prices are affordable. The average South Dakota home value is $307,799, according to Zillow. Popular places to get a mortgage are Sioux Falls (the largest city) and Rapid City (the second largest). Let’s look at where homes might be most affordable, as well as where the costs are highest:

Least Expensive Locations

For homebuyers looking for the best affordable places in the U.S., South Dakota offers many options. Here are some places where the costs of living and home values are both on the less-expensive side:

•   Sioux Falls: The cost of living here is 16 points below U.S. average even though it’s a little above average for South Dakota. The city made SoFi’s list of best affordable places in South Dakota in part because its size offers many options for homebuyers. The average home value here is $325,716.

•   Vermillion: Located near the banks of the Missouri River, it has a historic downtown district with specialty shops, galleries, dining and more. Vermillion is one of the lowest cost-of-living locations in this already-affordable state.

•   Pierre: Pierre also has an affordable cost of living, even though it is the capital of South Dakota. Near the Missouri River, it’s still a relatively small town.

Most Expensive Locations

As mentioned above, South Dakota is one of the country’s more affordable places to put down roots. So even some of its more expensive home markets aren’t as high as those elsewhere.

•   Keystone: The average home value here is $607,380.

•   Colonial Pine Hills: The average home value in this Rapid City suburb is $581,468.

•   Henry: Its average home value is $551,712.

Recommended: The Cost of Living in the U.S.

Tips for Securing a Competitive Mortgage Rate in South Dakota

Obtaining a competitive mortgage rate can save you thousands of dollars over the life of your loan. Here are some tips to help you secure the best possible rate in South Dakota:

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.

Get Preapproved

Going through the mortgage preapproval process will give you concrete details about how much house you can afford and what your monthly payments would look like. It also 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.

South Dakota Mortgage Resources

South Dakota offers resources to assist homebuyers, particularly those who qualify as a first-time-homebuyer and those with limited financial resources. These include:

First-Time Homebuyer Programs

South Dakota Housing offers a mortgage to first-time homebuyers (defined as those who have not owned a principal residence in three years) through participating lenders. There are income limits and a maximum purchase price of $385,000.

Down Payment Assistance

Buyers who struggle to save for a down payment or closing costs may find help from the South Dakota Housing Development Authority Fixed Rate Plus loan program, which provides 3% or 5% of the mortgage amount in down payment and closing cost assistance. This comes in the form of a second mortgage at 0% interest, due when the home is sold or the mortgage is paid off. Buyers should also look into local organizations in their area, as there are sometimes also local down payment assistance programs that can help.

Tools & Calculators

Using tools and calculators can help homebuyers estimate their monthly mortgage payments, determine how much house they can afford, and compare different loan options.

Refinancing Options in South Dakota: Exploring Your Possibilities

Homeowners in South Dakota who have an existing mortgage may be able to benefit from refinancing their loan. Refinancing can help you lower your interest rate, reduce your monthly payments, or cash out some of your home’s equity. Most banks and other lenders will offer refinancing, and there are also government options, including these:

•   FHA Streamline Refinance: The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. This program is available to borrowers who have an existing FHA loan and are current on their payments.

•   Interest-Rate Reduction Refinance Loan: An Interest-Rate Reduction Refinance Loan (IRRRL) can reduce the monthly payments on VA loans by adjusting the Annual Percentage Rate (APR). This program is available to veterans and active-duty military members who have an existing VA loan.

Closing Costs and Fees in South Dakota: What to Expect

When purchasing a home in South Dakota, buyers can expect to pay closing costs, which are fees associated with the mortgage loan and the sale of the property. These costs typically range between 3% and 6% of the home’s purchase price.

Factors that influence closing costs in South Dakota include the property value, location, and type of mortgage loan. Some common closing costs include:

•   Loan origination fee

•   Appraisal fee

•   Credit report fee

•   Title insurance fee

•   Recording fee

•   Transfer tax

The Takeaway

South Dakota’s mortgage landscape offers a range of options for homebuyers, from first-time buyers to those looking to refinance their existing loans. Staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options will help ensure homeowners a sound financial future in the Mount Rushmore State.

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.

FAQ

Will mortgage rates drop in South Dakota?

Rates are influenced by various economic factors and can fluctuate over time, so while they may drop in South Dakota, they may also rise — and there is no guarantee of the timing or extent of these changes.

Will mortgage rates ever go back to normal?

The definition of “normal” mortgage rates can vary depending on historical context. Mortgage rates have experienced periods of both highs and lows over the years. While rates may eventually return to a level that is considered normal based on historical averages, the timing and exact rate is impossible to predict.

Will South Dakota home prices ever drop?

Home prices in South Dakota are influenced by a combination of economic factors, housing demand, and supply. Your best bet is to check with one or more local real estate agents who may have a sense of what to expect in the specific market area you’re exploring.

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

Determining the right time to buy a house involves considering personal financial circumstances, housing market conditions, and individual preferences. There is no universally good or bad time to buy a house.

How do I lock in a mortgage rate?

To lock in a mortgage rate, you can work with a lender to obtain a rate lock agreement. This agreement guarantees a specific interest rate for a certain period, typically ranging from 30 to 90 days. During this lock-in period, the agreed-upon interest rate will be honored, regardless of any fluctuations in market rates. However, rate lock agreements often come with a fee, so it’s important to weigh the cost against the potential benefits before locking in a rate.

How do mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. They are expressed as a percentage of the loan amount and are used to calculate the monthly mortgage payments. Interest rates can be fixed, meaning they remain the same throughout the life of the loan, or adjustable, meaning they can change periodically based on a financial index.

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.

†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.

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.

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-Q324-096

Compare mortgage rates in Rhode Island.

Introduction to Mortgage Rates

Mortgage rates play a crucial role in determining the affordability of homeownership. Understanding the factors that influence mortgage rates in Rhode Island can empower homebuyers to make informed decisions, especially considering that this is the country’s 10th most-expensive state as ranked by cost of living. Mortgage interest rates are calculated based on a complex combination of factors that can be broadly categorized into two buckets: the state of the economy and the borrower’s financial status. We’ll look at this in more detail.

Where Do Mortgage Rates Come From?

The Federal Reserve, also known as the Fed, plays a pivotal role in determining mortgage rates. The Fed sets short-term interest rates that banks use as a benchmark for setting their own interest rates, including mortgage rates. Although mortgage rates are not directly tied to Fed rates, they tend to follow the same economic trends.

When the Fed’s interest rate is high, chances are home loan rates will be too. Homebuyers can stay informed about the Fed’s monetary policy decisions to anticipate potential changes in mortgage rates.

How Interest Rates Affect Home Affordability

Mortgage rates have a more significant impact on home affordability than many people realize. Even small changes in interest rates can significantly affect the monthly mortgage payments and the overall cost of homeownership.

For instance, if you borrow $380,000 at 5.50% interest for a 30-year term, you’ll pay $2,157 per month. But if your interest rate is 6.50%, your monthly payment will be $2,401. And you’ll pay almost $88,000 more for the higher-interest-rate loan over the life of the mortgage.

Recommended: Average Monthly Expenses for One Person

Should Homebuyers Wait for Interest Rates to Drop?

Many homebuyers. especially those buying a first home, grapple with the dilemma of whether to purchase a home immediately or wait for interest rates to drop. While it is impossible to predict future interest rate movements with certainty, there are a few factors to consider.

First, it is important to recognize that while mortgage rates are cyclical and have historically fluctuated over time, waiting for an ideal interest rate may mean missing out on the opportunity to purchase a home at a favorable price.

Homeowners also have the option of a mortgage refinance in the future if interest rates decrease. Refinancing may allow homeowners to secure a lower interest rate on their existing mortgage, potentially reducing their monthly payments and saving money over the long term.

Rhode Island Mortgage Rate Trends

By examining past data, homebuyers can make informed decisions about the best time to purchase a home based on their financial situation and market conditions. With a few exceptions, mortgage rates in Rhode Island have trended nicely below the national average over the last couple decades (the Federal Housing Finance Agency stopped tracking state averages in 2018).

Historical U.S. Mortgage Rates

Looking at the national trend over several decades can also provide context. Although rates in, say, 2023 might seem “high,” they are still far below the peak rates of the 1980s.

Factors Affecting Mortgage Rates in Rhode Island

Numerous factors influence mortgage rates in Rhode Island and nationwide. Understanding them can help homebuyers navigate the mortgage process effectively. As noted above, they divide into two categories: economic and personal.

Economic Factors

•   The Federal Reserve: The Fed sets the federal funds rate, which serves as a benchmark for other interest rates, including mortgage rates. When the Fed lowers the federal funds rate, mortgage rates tend to follow suit.

•   Inflation: The general increase in prices of goods and services affects mortgage rates. When inflation rises, the purchasing power of money decreases. Lenders may increase mortgage rates to compensate.

•   Unemployment: A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing — which may in turn put upward pressure on prices. The Fed also looks at employment stats when setting its rate. As unemployment rises, so does the Fed’s rate.

Consumer Factors

•   Credit score: A higher credit score generally makes a borrower more attractive to lenders, which may result in the would-be homeowner being offered a lower mortgage interest rate.

•   Down payment: A larger down payment may reduce the mortgage interest rate a borrower is offered, because there is less risk for the lender when the borrower has more equity in the home.

•   Income and assets: A steady income and assets that could provide a cushion in a downturn are also important to lenders, who will check your employment history as well as your salary.

•   Type of mortgage loan: The type of mortgage loan selected can also impact the interest rate. 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 a shorter loan term usually comes with a lower rate than a longer term.

Types of Mortgages Available in Rhode Island

Homebuyers in Rhode Island have access to various mortgage types, each with its own characteristics and benefits. Understanding these options can help borrowers choose the most suitable mortgage for their financial situation and homeownership goals.

Fixed-Rate Mortgage

Fixed-rate mortgages offer stability and predictability, as the interest rate remains constant throughout the life of the loan, which might be anywhere from 10 to 30 years. This type of mortgage is ideal for borrowers who prefer consistent monthly payments and want to lock in a favorable interest rate.

Adjustable-Rate Mortgage

Adjustable-rate mortgages (ARMs) offer lower initial interest rates compared to fixed-rate mortgages, making them attractive to borrowers who plan to sell their home before the fixed-rate period ends. However, it is important to note that the interest rate on an ARM fluctuates over time based on market conditions, potentially leading to higher monthly payments in the future.

FHA Loans

Loans insured by the Federal Housing Administration are designed to make homeownership more accessible to borrowers with limited financial resources. FHA loans typically have more lenient credit and income requirements compared to conventional loans, making them a good option for first-time homebuyers or those with less-than-perfect credit.

FHA loans require a smaller down payment compared to conventional loans — as little as 3% down for first-time homebuyers — making it easier for borrowers to enter the housing market. However, FHA loans come with mortgage insurance premiums, which add to the overall cost of the loan.

VA Loans

VA loans, backed by the Department of Veterans Affairs, are available to eligible veterans, active-duty military members, reservists, and surviving spouses. VA loans provide several benefits, including no down payment requirement, competitive interest rates, and flexible credit requirements. If a VA loan sounds interesting to you, after researching this option you’ll want to obtain a Certificate of Eligibility (COE) from the VA.

USDA Loans

USDA loans, backed by the U.S. Department of Agriculture, are designed to assist borrowers whose income falls below a certain threshold in purchasing homes in rural areas. USDA loans offer competitive interest rates and do not require a down payment, making them an attractive option for eligible borrowers.

To qualify for a USDA loan, borrowers must meet certain income and property location requirements. USDA loans can provide affordable financing options for individuals seeking to purchase homes in rural communities.

Jumbo Loans

Jumbo loans are conventional mortgage loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Conventional mortgage loans have a cap of $832,750 for a single-family home mortgage in Rhode Island. Jumbo loans are available for borrowers who need to finance homes above this amount. A jumbo loan typically comes with higher interest rates and stricter credit and income requirements compared to a conforming loan.

Popular Places to Get a Mortgage in Rhode Island

Securing a mortgage often depends on choosing the right location, where home prices are affordable and the cost of living is within your means. Larger cities in this small state, such as Providence, Warwick, and Cranston, are popular places to get a mortgage in Rhode Island. Homebuyers might be especially interested in less-expensive locations if the budget is tight.

Least Expensive Locations

Rhode Island is ranked 10th for the most expensive cost of living in the U.S. and the average home value in the state is $469,927. For homebuyers seeking the most affordable housing options in Rhode Island, the following locations offer relatively lower home prices:

•   Central Falls: Central Falls is a small city with a diverse population. The cost of living is below-average for Rhode Island, and the average home value is $343,604.

•   West Warwick: Near Warwick, West Warwick is a town with a mix of residential and commercial areas with an average home value of $373,421.

•   Woonsocker: At $367,083, average home value here is below the state average.

Most Expensive Locations

For homebuyers seeking luxury properties or homes in highly desirable areas, the following locations offer some of the most expensive housing options in Rhode Island:

•   Newport: Known for its beautiful coastline, historic mansions, and yachting culture, Newport is a popular destination for affluent homebuyers and has an average home value of $837,990.

•   Narragansett: Situated along the Atlantic Ocean, Narragansett is a popular summer destination known for its beautiful beaches and charming seaside villages. The average home value here is $762,673.

•   East Greenwich: There is an average home value of $749,243 in this area in the center of the state, which has a quaint main street and many historic homes.

Recommended: Best Affordable Places in the U.S.

Tips for Securing a Competitive Mortgage Rate in Rhode Island

Obtaining a competitive mortgage rate is crucial for saving money over the life of a loan. Even a small difference in the interest rate can translate to thousands of dollars in savings. Here are some tips for securing a competitive mortgage rate in Rhode Island:

Compare Interest Rates and Fees

Shopping around for the best mortgage rate can save you thousands of dollars over the life of your loan. Don’t be afraid to negotiate with lenders and compare offers from multiple banks and credit unions. Make sure you include the lender’s fees in your calculations.

Get Preapproved

Going through the mortgage preapproval process strengthens your position as a buyer and allows you to move quickly when you find the right property. It also gives you a better idea of how much you can afford to borrow, which can help you narrow down your search.

Rhode Island Mortgage Resources

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

•   Rhode Island Housing This agency provides a range of services to support homebuyers, including down payment assistance programs, closing cost assistance, mortgage loans, and financial counseling. They also offer educational workshops and resources to help individuals understand the home-buying process.

•   NeighborWorks Blackstone River Valley: This nonprofit organization provides homebuyer education and financial counseling, to help low- and moderate-income individuals prepare for homeownership.

•   Rhode Island Community Lending Program: This fund features waived lender fees and low or discounted rates on fixed rate mortgages. Borrowers may qualify because of their lower income, or because of the location where they are purchasing.

First-Time Homebuyer Programs

Rhode Island residents who qualify as a first-time homebuyer can take advantage of FHA, VA, and USDA loans. Rhode Island Housing also has a state-specific program for new purchasers whose incomes fall below $134,320 (for a family of two). It offers 100% financing (meaning no down payment is needed).

Down Payment Assistance

For homebuyers who may not have the funds for a substantial down payment, Rhode Island Housing’s Down Payment Assistance Program offers down payment assistance to eligible first-time homebuyers in the form of a second mortgage, with a maximum of $20,000. Borrowers need a credit score of at least 620.

Tools & Calculators

Rhode Island Housing offers a mortgage calculator to help homebuyers estimate their monthly mortgage payments. Or use the tools below for a full picture of your financial readiness as a homebuyer.

Refinancing Options in Rhode Island: Exploring Your Possibilities

Homeowners in Rhode Island may consider refinancing their mortgage to secure a lower interest rate, reduce their monthly payments, or access cash for other financial needs. Most mortgage lenders offer basic mortgage refinance loans. Or consider one of the options below.

•   FHA Streamline Refinance: This refinancing option is available to homeowners with an FHA mortgage who are current on their mortgage payments. It allows homeowners to refinance into current mortgage rates with minimal hassle and paperwork.

•   Interest-Rate Reduction Refinance Loan: This type of refinance loan is available to VA loan borrowers who are up to date on their mortgage payments. It allows borrowers to reduce the monthly payments on their VA loans by obtaining an adjusted interest rate.

•   Cash-Out Refinance: A cash-out refinance, obtained through a conventional mortgage lender, allows homeowners to borrow against the equity in their home and receive the difference in cash. This can be a good option for homeowners who need to access cash for major expenses, such as home renovations, education, or debt consolidation.

Closing Costs and Fees in Rhode Island: What to Expect

Closing costs are fees that are paid at the closing of a real estate transaction. These costs can include lender fees, title fees, and other miscellaneous expenses. Buyers in Rhode Island can expect to pay between 3% and 6% of the home’s purchase price in closing costs.

The Takeaway

Mortgage rates in Rhode Island are influenced by both economic factors and your personal financial profile, including the type of mortgage you choose. Potential homebuyers in Rhode Island should carefully consider their financial situation and goals when choosing a mortgage and will want to compare interest rates and fees from multiple lenders.

FAQ

What is a mortgage rate?

A mortgage rate is the interest rate charged on a mortgage loan. It is expressed as a percentage and is used to calculate the monthly mortgage payment.

Will mortgage rates drop in Rhode Island?

Predicting future interest rate movements is challenging, and there is no guarantee that rates will drop.

Will mortgage rates ever go back to normal?

The definition of “normal” interest rates can vary over time. Mortgage rates have fluctuated throughout history and are influenced by various economic factors.

Will Rhode Island home prices ever drop?

Real estate market conditions can change, and home prices can fluctuate. Predicting future home price movements is challenging and depends on various factors.

Is it a good time to buy a house in Rhode Island?

Whether it is a good time to buy a house in Rhode Island depends on individual circumstances, financial goals, and the current real estate market conditions. Consult a real estate agent in the local market to get a sense of whether prices are on the way up or down.

How do I lock in a mortgage rate?

Borrowers can lock in their interest rate for a certain period by getting a rate lock from a lender. This can protect them from rising rates.There may be a fee involved.

How do mortgage interest rates work?

Mortgage interest rates are influenced by various economic factors, including inflation, the federal funds rate, and the supply and demand for mortgages. But a potential borrower’s personal financial situation, including their credit score, will also influence the rate they are offered.

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.

†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.

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.

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-Q324-094

Compare mortgage rates in Idaho.

Simply put, your mortgage interest rate is the money you pay the bank in exchange for lending you the amount you need to buy a home. Even when interest rates are low, the cost can really add up over time. That’s why it’s important for Idaho homebuyers to set themselves up for the lowest mortgage rate possible.

We’ll walk you through the following:

•   Where mortgage rates come from

•   How interest rates affect home affordability

•   Economic and consumer factors influencing rates

•   Type of mortgages

•   Mortgage rate trends in Idaho

•   Popular places to get a mortgage in Idaho

•   Ways to secure a competitive mortgage interest rate

•   Idaho homebuyer assistance programs

•   Refinancing options

•   Closing costs and fees in Idaho

Introduction to Mortgage Rates

Mortgage rates are calculated using a complex combination of factors that include the state of the economy and the borrower’s financial status. State interest rates generally follow national trends, but there can be variations due to local economic conditions and housing market dynamics. Idaho’s mortgage rates, for instance, are influenced by the state’s job market, cost of living, and housing supply.

Where Do Mortgage Rates Come From?

The Federal Reserve, aka the Fed, sets the short-term interest rates that banks use. Although home loan rates aren’t directly tied to Fed rates, they follow the same economic trends. So when the Fed’s interest rate is high, chances are mortgage rates will be too.

Other mortgage rate influencers include the bond market, inflation, and the unemployment rate. We’ll get into those more below.

How Interest Rates Affect Home Affordability

Mortgage rates have a bigger impact on home affordability than you may realize. Consider the national median home price of $412,300 for Q2 2024. With a 30-year fixed mortgage at 3.00%, the monthly payment is approximately $1,390. However, if the interest rate increases to 6.00%, the monthly payment jumps to $1,977. Such an increase — more than 40% — can affect affordability for many buyers.

Should Homebuyers Wait for Interest Rates to Drop?

The burning question, especially if you’re buying your first home, is: Should I jump in now or wait? All else being equal, the answer is probably don’t wait. Although mortgage rates have been higher than they were during the pandemic, they’re actually close to the 50-year average. And when rates do drop, the housing market will be flooded by buyers who have been sitting on the sidelines.

While it’s always tempting to wait for lower rates, your personal circumstances are more important. If you’re ready financially and need a new home, higher interest rates shouldn’t deter you. After all, a mortgage refinance could still lower your rate later.

Idaho Mortgage Rate Trends

Understanding historical mortgage rate trends can provide valuable insights into the future. In Idaho, mortgage rates have experienced significant fluctuations over the past two decades. From a high of 7.96% in 2000, rates steadily declined to 5.78% by 2003. While rates have risen in recent years, they remain below historical highs. Experts predict that Idaho mortgage rates will likely stay above historical lows for the foreseeable future.

Below you’ll find the average annual interest rate for Idaho and the United States for 2000 through 2018. (The FHFA stopped reporting the data in 2018.)

Historical Interest Rates in Idaho

Historical U.S. Mortgage Rates

Factors Affecting Mortgage Rates in Idaho

As mentioned above, many factors influence mortgage rates in Idaho and nationwide. Some of those are economic, but others are entirely within the homebuyer’s control. Here’s how they break down:

Economic Factors

•   The Fed: The federal funds rate serves as a benchmark for other interest rates, including mortgage rates.

•   Inflation: When inflation rises, 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.

•   Unemployment rate: 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

•   Credit score: A higher credit score generally results in a lower mortgage interest rate. Lenders view borrowers with higher credit scores as less risky, making them more likely to offer favorable rates.

•   Down payment: Increasing your down payment may reduce your mortgage rate. A larger down payment lowers the loan-to-value ratio (LTV), the portion of the home’s value financed by the loan. A lower LTV reduces the lender’s risk and may result in a lower 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.

•   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 a shorter loan term usually comes with a lower rate than longer terms.

💡 Recommended: What Is the Average Down Payment On a House?

Mortgage Options for First-Time Homebuyers in Idaho

Idaho offers a variety of home loan options tailored to different homebuyers. Some options can make it easier for first-time buyers to enter the real estate market. To help you decide which mortgage is the right choice for your situation, we’ll dive into six of the leading types.

Fixed Rate Mortgage

As the name suggests, a fixed-rate mortgage has an interest rate that is fixed across the lifetime of the loan. Fixed-rate mortgages can be 10,15, 20, or 30 years. As we note above, shorter terms usually have lower interest rates than 30-year mortgages.

With a fixed-rate mortgage, as long as you make all your payments on time, your payment will never change. So as rents continue to increase, your fundamental housing cost stays the same.

Adjustable Rate Mortgage

With an adjustable rate mortgage, also known as an ARM, the interest rate can change periodically over the life of the loan. That means your monthly payment can also increase or decrease.

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), these mortgages are designed to make homeownership more accessible for first-time buyers. They typically have more lenient credit and income requirements compared to conventional loans. FHA loans also allow for lower down payments, with a minimum of 3.5% for qualified borrowers. However, it’s worth noting that FHA loans often come with higher closing costs compared to conventional loans.

VA Loan

VA loans are available to veterans, active-duty military members, and certain reserve and National Guard members. These loans offer no down payment requirement, no private mortgage insurance, and typically lower interest rates compared to conventional loans. VA loans also have less stringent credit and income requirements.

USDA Loan

USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA). Eligibility requirements include income limits and property location restrictions. USDA loans offer $0 down payment requirements and favorable terms.

Jumbo Loan

You might not be aware that conventional mortgage loans have a cap of $726,200 for a single-family home. Monroe County, Idaho, has a higher cap of $874,000. Higher-priced homes require what’s called a jumbo loan, also known as a nonconforming loan. Jumbo loans may have slightly higher interest rates compared to conforming loans, and tougher qualifying standards.

Popular Places to Get a Mortgage in Idaho

Securing a mortgage often depends on choosing the right location, where the cost of living and home prices are affordable. The cost of living refers to how much money it takes to maintain a basic standard of living in a given place.

The Cost of Living Index (COLI) ranks all 50 states against the overall average cost of living in the U.S. Idaho comes in at number 36, with an index of 103.1, a little over the national average. Idaho housing comes in a bit higher, with an index of 108.4.

The average monthly expenses for one person nationwide comes to $3,405 per month. Based on the COLI, Idaho’s statewide average is a bit higher.

Least Expensive Locations

For those seeking the most affordable housing options, several cities in Idaho offer median home prices below the state average, as of Q3 2024:

•   Deltona, $313,018. Up 4.1%.

•   Gainesville, $302,416. Up 2.6%. Gainesville has a booming job market in education, healthcare, and technology.

•   Jacksonville, $301,690. Up 1.0%. This city of 1 million has the second lowest cost of living in the state.

•   Lakeland, $324,803. Up 1.6%.

•   Lake City, $259,446. Up 5.3%.

•   Palm Bay, $314,431 median home price. Up 0.5% over the past year.

•   Panama City, $283.600. Up 1.3%.

•   Pensacola, $268,099. Up 1.6%. Pensacola offers a cost of living 13% lower than the national average.

Most Expensive Locations

Idaho also has several cities with higher median home prices, catering to those seeking luxury real estate. The median single-family home sale price in Idaho was $420,600 in March 2024, reflecting a year-over-year increase of 3.1%. Idaho’s single-family housing inventory was 40.5% higher year-over-year in March 2024.

Miami Beach is one of the most expensive cities in Idaho, with median home prices exceeding $530,000. Naples is known for its high real estate prices, with home prices often surpassing $600,000.

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

Securing a Competitive Mortgage Rate in Idaho

A competitive mortgage rate is crucial for saving money over the life of a loan. Even half a percentage point can translate to many thousands of dollars. For example, a $320,000 mortgage at 6.00% will cost you $370,683 in interest over 30 years. For the same mortgage amount at 6.50%, you’ll pay $408,140 – an additional $37,457.

First, you’ll want to do a little financial housekeeping:

•   Pay off high interest debt. Pay down credit cards as much as you can. This will lower your debt-to-income ratio. Mortgage lenders like to see a DTI ratio of 36% or under.

•   Save for a larger down payment. Remember, a higher down payment can help you secure a lower interest rate. Down payments of less than 20% are also subject to private mortgage insurance, which can cost between 0.5% and 1.5% of the loan amount annually.

•   Check your credit report for errors. Review your credit history, correct any errors, and dispute anything that doesn’t look familiar. You can get a free credit report at AnnualCreditReport.com.

Once you’ve aligned your proverbial ducks, here are two additional tips to help you secure the best possible rate:

Compare Interest Rates and Fees

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

Homebuyers can compare the latest mortgage rates in Idaho by using a mortgage rate comparison tool. Just enter your home location, property value, and loan amount. Then filter the results by loan type, such as 30-year fixed, 15-year fixed, or 5-year ARM.

How to 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.

You’ll fill out a thorough application and provide documentation. The mortgage preapproval process can take 10 days or more, but the work is well worth it.

Idaho Mortgage Resources: Assistance for Homebuyers

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

First-Time Homebuyer Programs

The Idaho Housing Finance Corporation provides programs tailored to first-time homebuyers, including down payment assistance programs and closing cost assistance.

Learn more about Idaho First-time Homebuyer Programs here.

Tools & Calculators

SoFi provides online tools and calculators to help homebuyers estimate their monthly mortgage payments, resources to determine their eligibility for assistance programs and compare different loan options. These resources can empower homebuyers to make informed decisions throughout the homebuying process.

Refinancing Options in Idaho: Exploring Your Possibilities

Refinancing a mortgage can be a strategic move to lower your interest rate, reduce your monthly payment, or access cash for home improvements. Idaho offers various refinancing options, including the FHA Streamline Refinance, Interest-Rate Reduction Refinance Loan, and cash-out refinance.

Each option has its own benefits and requirements, so it’s essential to consult with a mortgage professional to determine the best refinancing strategy for your situation.

Closing Costs and Fees in Idaho: What to Expect

Closing costs associated with purchasing a home in Idaho can range from 3% to 6% of the purchase price. For a $300,000 mortgage to buy a $350,000 house, your closing costs could be between $9,000 and $18,000. It’s important to factor closing costs into your budget when planning for homeownership. Lenders are required to provide a loan estimate that outlines your estimated closing costs within three days of your application.

Closing costs can include any or all of the following:

•   Abstract and recording fees

•   Application fee

•   Appraisal fee

•   Attorney costs

•   Credit reporting, underwriting, and origination fees

•   Flood certification fee

•   Home inspection fee

•   Homeowners insurance

•   Home warranty

•   Mortgage points

•   Prepaid interest

•   Private mortgage insurance

•   Title search and title insurance fees

The Takeaway

Idaho’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 in the Sunshine State.

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.

FAQ

What is a mortgage rate?

Simply put, a mortgage rate is the interest rate charged by a lender for borrowing money to purchase a home.

Will mortgage rates drop in Idaho?

Predicting future interest rate movements is challenging, and there is no guarantee that mortgage rates will drop in Idaho. However, state interest rates tend to follow national rates.

Will mortgage rates ever go back to normal?

The definition of normal interest rates varies over time. While current rates are higher than the rock-bottom rates we saw during the pandemic, they are close to the 50-year average, meaning they’re “normal” now.

Will Idaho home prices ever drop?

Real estate market conditions, including home prices, are influenced by supply and demand, economic factors, and location-specific dynamics. Predicting future price movements with certainty is difficult.

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

Whether it is a good time to buy a house in Idaho depends on individual circumstances and market conditions. If you’re financially ready and need a new home – due to a growing family or relocation — then it’s a good time to buy.

How to lock in a mortgage rate?

To lock in a mortgage rate, you can get preapproved for a mortgage and request a rate lock from the lender. This will secure the current interest rate for a specified period, typically up to 90 days.

How do mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. Fixed rates remain the same for the lifetime of the loan, while adjustable rate mortgages (ARMs) have rates that change on a regular basis. For a 5/1 ARM, there’s a five-year introductory period after which your rate changes (up or down) every year.

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.

SOHL-Q324-029