Compare mortgage rates in Colorado.

Introduction to Mortgage Interest Rates

In an April 2024 survey, SoFi asked 500 would-be homebuyers what they considered to be the most important factors in choosing a mortgage lender. Far and away, interest rates won out, with 64% of people saying rates were a key consideration.
Mortgage rates are constantly fluctuating, influenced by various economic and consumer factors. Here, we provide an overview of current mortgage rates in Colorado, exploring the factors that shape them and offering insights into available mortgage options and resources.

Where Mortgage Rates Come From

The Federal Reserve, also known as the Fed, plays a central role in how mortgage rates are set. The Fed determines 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. When the Fed cuts interest rates, chances are mortgage rates will drop too.

It’s important to note that mortgage rates are not solely determined by the Fed’s actions. Other economic factors, such as inflation and unemployment, also influence mortgage rates. More important to homebuyers, your financial profile dictates the mortgage rates you’re offered, including your income and assets, credit score, and history of paying off debt.

How Interest Rates Affect Home Affordability

Mortgage rates have a bigger impact on home affordability than people realize. Even small interest rate changes can put homeownership out of reach for middle-income Americans.

For instance, a one-percentage-point increase in interest rate on a $300,000 mortgage can add almost $200 to the monthly mortgage payment. Over the life of a 30-year loan, that translates to $70,000 dollars in additional interest paid.

No wonder savvy homebuyers carefully consider interest rates when making a home purchase decision.

Should Homebuyers Wait for Interest Rates to Drop?

If you’re buying your first home, you may wonder if you should buy now or wait for interest rates to come down further. There’s no easy answer to this question, as it depends on your individual circumstances.

But waiting for interest rates to drop can be a gamble. While rates may indeed decrease in the future, there’s no guarantee of when or by how much. Additionally, home prices may also appreciate during this waiting period, potentially offsetting any savings from lower interest rates.

On the other hand, buying now may allow you to lock in a manageable interest rate and start building equity in your home. If rates do drop in the future, you can always refinance your mortgage to take advantage of lower rates.

Colorado Mortgage Rate Trends

How low can Colorado mortgage rates go? After four years of hiking rates in response to inflation, the Fed cut 0.50% from its benchmark rate in September 2024. Experts believe more cuts are to come, possibly into 2025. Let’s look back at the historical data.

Historical Interest Rates in Colorado

In Colorado, mortgage rates have ranged from a high of 7.81% in 2000 to a low of 3.65% in 2016 — a bit lower than the national average.

Historical U.S. Mortgage Rates

Understanding historical mortgage rates can provide valuable insights into where rates are headed. Over the past 50 years, national mortgage rates have fluctuated significantly, ranging from lows of around 3.00% in the early 1970s to highs of over 18.00% in the early 1980s. More recently, when rates were rising, they still remained well below historical highs. Indeed, current mortgage rates are around the 50-year average.

Factors Affecting Mortgage Rates in Colorado

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

Understanding these factors can help homebuyers make informed decisions about their mortgage options. Let’s dive into some of the key factors that impact mortgage rates:

Economic Factors

Economic factors play a significant role in shaping mortgage rates. Here are a few key economic factors to watch:

•   The Fed:As noted above, the Fed’s rate decisions have a profound impact on mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, which leads to higher mortgage rates. Conversely, when the Fed lowers the federal funds rate, borrowing becomes cheaper, potentially resulting in lower mortgage rates.

•   Inflation:Inflation also affects mortgage rates. 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 for the reduced value of their loans.

•   Unemployment rate:Unemployment also moves the needle on mortgage rates. A lower unemployment rate generally indicates a strong economy, which can lead to increased demand for housing. This increased demand can put upward pressure on mortgage rates.

Consumer Factors

Don’t underestimate how your financial behavior can impact the interest rates you’re offered — for auto loans, personal loans, and mortgage loans.

•   Credit score: Your credit score goes a long way in determining your mortgage rate. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. As a result, borrowers with higher credit scores typically receive lower mortgage interest rates.

•   Down payment: The size of your down payment can also affect mortgage rates. A larger down payment reduces the amount of money you need to borrow, which lowers the risk for the lender. As a result, borrowers who make larger down payments may be eligible for lower mortgage interest rates.

•   Income and assets: Income and assets are also considered when determining mortgage rates. A steady income and sufficient assets demonstrate the borrower’s ability to repay the loan, making them more attractive to lenders. As a result, borrowers with stable income and substantial assets may be eligible for lower mortgage interest rates.

•   Type of mortgage loan: The type of mortgage loan you choose can also impact the interest rate. Certain types of loans — such as adjustable-rate mortgages (ARMs) and government-backed loans like FHA and VA loans — may offer lower interest rates compared to conventional fixed-rate mortgages. Additionally, shorter loan terms typically come with lower interest rates than longer terms.

Types of Mortgages Available in Colorado

Now that you know certain types of mortgages can offer lower rates, it’s time to review the main categories of mortgage loans.

Fixed Rate Mortgage

A fixed-rate mortgage offers stability and predictability in terms of monthly payments. The interest rate remains the same throughout the entire loan term, which can be 10, 15, 20, or 30 years. This type of mortgage is ideal for borrowers who prefer consistent monthly payments and want to lock in a favorable interest rate.

The choice of loan term depends on your financial situation and preferences. Shorter loan terms generally come with lower interest rates but higher monthly payments, while longer loan terms offer lower monthly payments but higher total interest paid over the life of the loan.

Adjustable Rate Mortgage

An adjustable-rate mortgage (ARM) offers a lower initial interest rate compared to fixed-rate mortgages. However, the interest rate can adjust periodically, typically after a fixed introductory period of 5, 7, or 10 years. ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends or who expect interest rates to remain low in the near future.

The initial interest rate on an ARM is usually lower than the prevailing fixed-rate mortgage rate, making it an attractive option for borrowers looking to save money upfront.

However, it’s important to understand that the interest rate on an ARM can increase after the introductory period, potentially leading to higher monthly payments.

FHA Loan

FHA loans are backed by the Federal Housing Administration and are designed to make homeownership more accessible to borrowers with lower credit scores and limited down payment funds. And yet in SoFi’s 2024 survey, only 49% of homebuyers had heard of FHA loans.

FHA loans require a minimum credit score of 580 for a 3.5% down payment and a minimum credit score of 500 for a 10% down payment. The maximum loan amount for FHA loans varies depending on the county and property type.

VA Loans

VA loans are offered by the U.S. Department of Veterans Affairs and are available to eligible veterans, active-duty military members, and certain surviving spouses. VA loans offer competitive interest rates and do not require a down payment. To qualify for a VA loan, you must meet certain service requirements and have a valid Certificate of Eligibility (COE).

USDA Loans

USDA loans are offered by the U.S. Department of Agriculture and are designed to assist low-income borrowers in purchasing homes in rural areas. USDA loans offer competitive interest rates and do not require a down payment, making them an excellent option for eligible borrowers. In SoFi’s survey, only 4 in 10 buyers (41%) had heard of USDA loans.

Jumbo Loans

Jumbo loans are conventional mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In many areas of Colorado, the 2026 conforming loan limit for a single-family home is $832,750. In high-priced Eagle County, the limit is $1,249,125. And some counties, such as Boulder County, have limits that fall in between. Jumbo loans typically have higher interest rates and stricter credit and income requirements compared to conventional loans.

Popular Places to Get a Mortgage in Colorado

Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Here are a few popular places to get a mortgage in Colorado:

•   Denver: Denver is the capital and most populous city in Colorado. It offers a diverse range of housing options and a strong economy, making it an attractive location for homebuyers. Average home value: $559,014, down 0.9% YOY.

•   Boulder: Boulder is a college town known for its beautiful scenery, outdoor recreation opportunities, and strong job market. It’s a popular choice for families and professionals seeking a high quality of life. Average home value: $974,244, down 0.2% YOY.

•   Colorado Springs: Colorado Springs is a city located in the Rocky Mountains and is known for its military presence, outdoor activities, and growing tech industry. It offers a mix of affordable housing and desirable neighborhoods. Average home value: $452,001, up 0.6% YOY.

•   Fort Collins: Fort Collins is a city located in northern Colorado and is known for its strong economy, outdoor recreation opportunities, and vibrant arts scene. It’s a popular choice for families and young professionals. Average home value: $558,282, up 1.3% YOY.

When considering these locations, it’s important to factor in the cost of living. The Cost of Living Index (COLI) compares the average monthly expenses for one person in different cities and states to the national average. A higher COLI indicates a higher cost of living.

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

Least Expensive Locations

Some of the least expensive places to get a mortgage in Colorado include:

•   Pueblo: Pueblo is a city located in southern Colorado and is known for its mild climate, historic architecture, and affordable housing. Average home value: $291,787, down 1.6% YOY.

•   Grand Junction: Grand Junction is a city located in western Colorado and is known for its beautiful scenery, outdoor recreation opportunities, and growing economy. It offers a mix of affordable housing and desirable neighborhoods. Average home value: $402,274, up 3.7% YOY.

•   Greeley: Greeley is a city located in northern Colorado and is known for its strong agricultural economy, affordable housing, and diverse population. Average home value: $421,303, up 0.4% YOY.

Recommended: Best Affordable Place to Live in the U.S.

Tips for Securing a Competitive Mortgage Rate in Colorado

Securing a competitive mortgage rate can save you tens of thousands of dollars over the life of your loan. Here are a few tips to help you get the most competitive rate:

•   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. It also helps to look at customer service ratings and reviews.

•   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.

Recommended: What to Know About Getting Preapproved for a Home Loan

•   Improve Your Credit Score: A credit score of 740 or above can translate to a lower mortgage rate. Take steps to improve your credit score, such as paying bills on time, reducing debt, and reviewing your credit report for errors.

•   Make a Larger Down Payment: Increasing your down payment may reduce your mortgage interest rate. In 2024, borrowers’ median down payment is 15%. With a down payment of 20% or more, you’ll also save money by avoiding private mortgage insurance.

Colorado Mortgage Resources

Colorado offers resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. (Don’t forget that to qualify for a first-time homebuyer usually means you haven’t owned a primary residence within the last three years.)

First-Time Homebuyer Programs

Colorado offers several programs to help first-time homebuyers save for a down payment and qualify for a mortgage. These programs include the Colorado Housing and Finance Authority
(CHFA) FirstStep and FirstStep Plus. Qualified borrowers get a 30-year fixed-rate FHA loan along with the ability to get a deferred second loan to put toward their down payment or closing costs.

Down payment assistance

Several down payment assistance programs are available in Colorado to help homebuyers with limited funds. These programs include the Colorado Housing Assistance Corporation (CHAC) Down Payment Assistance Program.

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 Colorado

Refinancing your mortgage 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 mortgage refinance options available in Colorado:

•   FHA Streamline Refinance: This program allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. It offers reduced documentation requirements, and no appraisal is required.

•   Interest-Rate Reduction Refinance Loan: This loan allows VA loan borrowers to reduce their monthly payments by adjusting the APR. It requires a credit check and appraisal but offers competitive interest rates.

Closing Costs, Taxes, and Fees in Colorado

Closing costs are fees associated with buying a home and obtaining a mortgage. In Colorado, buyers can expect to pay between 2% and 5% of the home’s purchase price in closing costs.
These costs may include:

•  Loan origination fee: Charged by the lender for processing the mortgage application.

•  Appraisal fee: Paid to an appraiser to determine the value of the home.

•  Credit report fee: Paid to a credit bureau for obtaining your credit report.

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

•  Recording fee: Paid to the county to record the mortgage documents.

The closing costs you pay will vary depending on the purchase price of the home, the type of loan you obtain, and the lender you choose. It’s important to factor these costs into your budget when buying a home.

The Takeaway

Colorado offers a range of options for homebuyers, from conventional fixed-rate loans to government-backed mortgages with more lenient credit requirements and low down payments. By staying informed about current mortgage rates, exploring assistance programs, and working to build your financial profile, you can achieve successful homeownership.

FAQ

Will mortgage rates drop in Colorado?

Following the first rate reduction in 2024, a decrease in mortgage rates is anticipated. Economists also expect additional rate cuts, which should further reduce mortgage rates into 2025. However, nothing is certain: Mortgage rates are influenced by various economic factors, as well as by homebuyers’ financial profile.

Will mortgage rates ever go back to normal?

The definition of “normal” mortgage rates can vary depending on individual perspectives and historical contexts. In spite of expected rate reductions by the Fed, the exceptionally low rates seen in 2021 are not predicted to return in the near future.

Will Colorado home prices ever drop?

Colorado home prices have generally been on an upward trend in recent years. However, real estate markets are cyclical and can be influenced by various factors such as housing supply and demand and local market dynamics. While prices may experience temporary fluctuations or corrections, long-term trends are difficult to predict with certainty.

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

The decision of whether it’s a good time to buy a house in Colorado depends on your individual circumstances and financial goals. Factors to consider include your income, savings, credit score, current mortgage rates, and housing market conditions. That said, it’s as good a year as any.

How do mortgage interest rates work?

Mortgage interest rates are influenced by various factors, including the Fed’s interest rate decisions, inflation, unemployment, and the borrower’s credit score, down payment, income, and type of mortgage loan. Lenders use these factors to assess the risk associated with lending money and set interest rates accordingly.

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

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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.

†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.

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Compare mortgage rates in California.

Introduction to Mortgage Rates

Obtaining a home loan is a significant financial decision, and understanding mortgage interest rates is essential for homebuyers in California and elsewhere. Here you’ll find a comprehensive overview of mortgage rates in California, including the factors that influence them, historical trends, and available mortgage types. By staying informed about current rates and exploring assistance programs, individuals can make strategic decisions that support their financial goals and achieve homeownership in California.

Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a home. These mortgage rates are determined by a complex combination of factors that can be separated into two buckets: the state of the economy and the borrower’s financial status.

Economic Factors Influencing Mortgage Rates

Economic conditions play a significant role in determining mortgage rates. Key factors include:

•  The Federal Reserve: Often referred to as the Fed, the country’s central bank sets the short-term interest rates that banks use. Although home loan rates are not directly tied to Fed rates, they tend to follow the same economic trends. When the Fed lowers interest rates (to much fanfare), mortgage rates are likely to follow.

•  Inflation: When inflation eases, the purchasing power of money increases, making it less expensive for lenders to lend money. As a result, they may pass along the savings to consumers through lower interest rates.

•  Unemployment Rate: A lower unemployment rate can lead to 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, consequently, mortgage interest rates.

Borrower Factors Influencing Mortgage Rates

In addition to economic factors, a borrower’s financial situation also impacts mortgage rates.

•  Credit Score: A higher credit score generally translates to a lower mortgage interest rate. Lenders view a high credit score as an indication of responsible financial behavior, reducing the perceived risk of default.

•  Down Payment: Increasing the down payment can lower the mortgage interest rate. A larger down payment reduces the loan amount and the debt-to-income ratio, making the borrower less risky in the eyes of the lender.

•  Income and Assets: A steady income is important to lenders, who will examine your employment history and salary. Assets such as investments and emergency savings also reassure lenders that you could still pay your mortgage in the event 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 (ARMs) typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. Additionally, a shorter loan term usually comes with a lower rate than longer terms.

How Mortgage 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 put homeownership out of reach for middle-income Americans. For instance, a 1.00% increase in interest rate on a $300,000 mortgage can result in an additional $188 in monthly payments. Over the life of the loan, that adds up to $67,746 in additional interest.

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 further. While it’s tempting to wait for rock-bottom rates, there are a few things to consider. First, no one can predict the future of interest rates with certainty — “timing the market” is a challenge even for the experts.

Second, waiting for rates to drop could mean missing out on the opportunity to buy a home when prices are favorable. A year or two from now, prices could rise beyond the reach of your budget. Finally, it’s important to note that you can always refinance a mortgage, potentially securing a lower interest rate in the future.

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

California Mortgage Rate Trends

Historical U.S. Mortgage Rates

Over the past 50 years, national rates have experienced significant fluctuations, ranging from a low of around 3% in the early 1970s to a high of over 18% in the early 1980s. Currently, rates are hovering around 6%, which is relatively low compared to historical averages.

Types of Mortgages Available in California

California offers all the types of mortgage loans available to borrowers nationwide. In an April 2024 SoFi survey of 500 people intending to purchase a home, 38% of respondents said that understanding mortgage options is one of the most confusing parts of the home buying process. So take a moment to review the options below — there may be some surprises.

Conventional Loans

Conventional loans are not backed by the government and typically require a down payment of at least 3%. (The national average down payment is 15%.) They can be fixed-rate or adjustable-rate.

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 offer a lower rate than fixed-rate loans. However, after a certain period (usually 5 or 7 years), the interest rate can adjust periodically based on market conditions. ARMs can be beneficial if you plan to sell the home before the fixed period ends or if you expect interest rates to decrease in the future.

FHA Loan

FHA loans usually have more lenient eligibility requirements than conventional loans. These mortgages are insured by the Federal Housing Administration, which helps reduce the risk to lenders, allowing them to offer lower interest rates and reduced down payment requirements.

VA Loans

VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. One of the primary benefits of VA loans is that they do not require a down payment, making them an attractive option for veterans.

USDA Loans

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) and offer competitive interest rates and relaxed credit requirements.

Jumbo Loans

Jumbo loans are conventional loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In California, the conforming loan limit for single-unit residences ranges from $832,750 in many counties to $1,249,125 in higher priced neighborhoods in the Bay Area and Los Angeles. Jumbo loans typically require a larger down payment and may have higher interest rates than conforming loans.

Popular Places to Get a Mortgage in California

Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Factors such as cost of living, proximity to supermarkets and good schools, and job opportunities also play a significant role.

Least Expensive Locations

One way homebuyers can search for affordable areas is by checking their cost of living compared to the overall cost of living in the U.S. Cities with a cost of living index (COLI) number of less than 100 are relatively affordable; COLIs of more than 100 are more expensive. In high-priced states like California, however, most cities rank above the average.

That means not only is housing likely more expensive, but so are the average monthly expenses for one person. Some of the least expensive locations to get a mortgage in California include:

•   Bakersfield: Bakersfield is a city in the southern Central Valley and offers a low cost of living compared to other parts of California. COLI: 109.6.

•   Stockton: Stockton is a city in the San Joaquin Valley and offers a relatively affordable housing market. It has a variety of mortgage options, including government-backed loans and low down payment programs. COLI: 122.6.

•   Modesto: Modesto is a city in the Central Valley and offers a low cost of living compared to other parts of California. It has a variety of mortgage options, including government-backed loans and low down payment programs. COLI: 117.7.

Most Expensive Locations

On the other hand, some of the most expensive locations to get a mortgage in California include:

•   San Francisco: San Francisco is consistently ranked as one of the most expensive cities in the U.S. and has a high cost of living. COLI: 169.6.

•   Los Angeles: Los Angeles is another major metropolitan area with a high cost of living. COLI: 150.6.

•   San Diego: San Diego is known for its beautiful weather and high quality of life, which contributes to its high cost of living. COLI: 144.2.

•   Santa Barbara: Santa Barbara is a coastal city known for its beautiful scenery and mild climate. COLI: 167.

•   Palo Alto: Palo Alto is a city in the Silicon Valley and is known for its high concentration of technology companies. COLI: 156.

Tips for Securing a Competitive Mortgage Rate in California

Obtaining a competitive mortgage rate is crucial for saving money over the life of a loan. Even half a percentage point can translate to tens of thousands of dollars in interest paid. Here are some tips for securing a competitive mortgage rate in California, from getting preapproved to comparing interest rates and fees:

•   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. It also gives you a better idea of how much you can afford to borrow. The mortgage preapproval process can take up to 10 days.

•  Consider a Shorter Loan Term: Shorter loan terms typically come with lower interest rates. If you can afford it, opting for a shorter loan term can save you money in interest over the life of the loan.

•  Improve Your Credit Score: A higher credit score can lead to a lower mortgage interest rate. Take steps to improve your credit score, such as paying bills on time and reducing your debt.

•  Make a Larger Down Payment: Increasing your down payment can lower your mortgage interest rate. If you can afford it, try to make a down payment of at least 20% to avoid paying private mortgage insurance (PMI).

•  Consider Government-Backed Loans: Government-backed loans, such as FHA loans and VA loans, often have lower interest rates than conventional loans. If you qualify for a government-backed loan, it may be a good option for you.

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. Don’t just go with the first offer you receive. Be sure to ask about any upfront costs or closing fees associated with the loan.

California Mortgage Resources

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

First-Time Homebuyer Programs

The California Housing Finance Agency (CalHFA) offers programs specifically designed to assist those buying their first home. These programs include both conventional and government-backed first mortgages. Buyers must meet income limits and minimum credit score requirements. For additional information on the below programs, visit our California First-Time Home Buying Assistance page.

•   CalHFA FHA Loan

•   CalPLUS FHA Loan

•   CalHFA VA Loan

•   CalHFA USDA Loan

•   CalHFA Conventional Loan

•   CalPLUS Conventional Loan

Down Payment Assistance

California’s MyHome program provides qualified borrowers with down payment assistance. Homebuyers with government-backed mortgages can apply for a junior loan of up to 3.5% of the home purchase price to cover down payment and closing costs. Payments are deferred until you sell, refinance, or pay off your mortgage.

Tools & Calculators

SoFi provides online tools and calculators to help homebuyers estimate their monthly mortgage payments, see how much home they can afford, and look ahead to their ultimate mortgage payoff date. These resources can empower homebuyers to make informed decisions throughout the homebuying process.

Refinancing Options in California

Homeowners in California may also consider refinancing their mortgage to secure a lower interest rate or access cash for other financial needs. Mortgage refinance options in California include:

•   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: An 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 may offer lower interest rates and flexible terms.

Closing Costs, Taxes, and Fees in California

When purchasing a home in California, buyers can expect to pay various closing costs, taxes, and fees. These costs typically range between 2% and 5% of the home’s purchase price and may include:

Closing costs can include any or all of the following:

•   Loan Origination Fee: A fee charged by the lender for processing the mortgage application.

•  Appraisal Fee: A fee paid to an appraiser to determine the value of the home.

•  Credit Report Fee: A fee paid to a credit bureau for obtaining the borrower’s credit report.

•  Title Insurance: Insurance that protects the lender against any claims on the title to the property.

•  Recording Fee: A fee paid to the county recorder for recording the mortgage documents.

•  Transfer Tax: A tax paid to the state or county when the property is transferred from the seller to the buyer.

•  Homeowners Insurance: Insurance that protects the homeowner against damage to the property.

•  Property Taxes: Taxes paid to the local government based on the assessed value of the property.

Factors influencing closing costs in California include property value and location. It’s important for homebuyers to carefully review the closing disclosure provided by the lender to understand all associated costs and fees.

The Takeaway

California’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 California.

FAQ

Will mortgage rates drop in California?

Following the Federal Reserve’s initial rate reduction in 2024, a decrease in mortgage rates is anticipated. Economists expect additional rate cuts, which should further reduce mortgage rates into 2025. Predicting long-term mortgage rates beyond this period remains challenging.

Will mortgage rates ever go back to normal?

Current mortgage rates are near the historical average. In other words, they’re “normal.” Despite expected rate reductions, the exceptionally low rates seen in 2021 are not expected to return in the near future.

Will California home prices ever drop?

Forecasting California home prices is tough given that they’re shaped by multiple factors such population changes, market conditions, and new development. But they’re unlikely to drop significantly in the near future.

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

It’s probably as good a year to buy as any. Interest rate cuts are likely to spur more homeowners to put their homes on the market, increasing inventory. On the flip side, more homebuyers will increase the competition for available homes. The real question is whether your finances and your family are ready to make this move.

How to lock in a mortgage rate?

Locking in a mortgage rate means securing a specific interest rate for a certain period, typically 30 to 90 days. However, rate locks are typically unnecessary in an environment of falling interest rates.

How do mortgage interest rates work?

Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a home. These rates are influenced by various factors, including the state of the economy, inflation, the unemployment rate, and the borrower’s financial situation. Lenders assess the borrower’s credit score, income and assets, and loan amount to determine the interest rate offered. Mortgage interest rates can be fixed, meaning they remain the same throughout the loan term, or adjustable, meaning they can change periodically based on market conditions.

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.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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-Q324-061

Compare mortgage rates in Utah.

Introduction to Mortgage Interest Rates

In spring 2024, SoFi asked 500 would-be homebuyers what were the most important factors in choosing a mortgage lender. Almost two-thirds (64%) of respondents said interest rates were a key consideration.

Mortgage interest rates are the fees charged by lenders for borrowing money to purchase a property. These rates are determined by a complex interplay of economic factors and the borrower’s financial profile. Understanding how mortgage rates are calculated and the factors that affect them is a smart move for homebuyers seeking the best possible deal.

Where Mortgage Rates Come From

The Federal Reserve, also known as the Fed, sets short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. While home loans are not directly tied to Fed rates, they tend to follow similar economic trends.

When the Fed’s interest rate is high, mortgage rates are likely to be higher as well. This relationship underscores the interconnectedness of the financial system and the impact of monetary policy on various borrowing costs.

As the Fed adjusts its interest rate policy, mortgage rates tend to respond accordingly, reflecting the overall cost of borrowing money in the economy.

How Interest Rates Affect Home Affordability

Mortgage rates have a profound impact on home affordability. Even small changes in interest rates can substantially affect monthly mortgage payments and the overall cost of homeownership.

For instance, a seemingly small difference of 1.00% can translate into tens of thousands of dollars in additional interest paid over the life of a mortgage. Indeed, rising interest rates can price middle-income families out of the housing market. This underscores the importance of securing the best possible mortgage rate to ensure affordability and long-term financial stability.

Should Homebuyers Wait for Interest Rates to Drop?

If you’re buying your first home, you may be facing the dilemma of whether to purchase a home immediately or wait for interest rates to drop. Experts caution against attempting to time the market and urge homebuyers to keep these considerations in mind:

Waiting for interest rates to drop may seem like a prudent strategy, rates can be unpredictable and may not always move in the desired direction. Additionally, home prices may also appreciate during this waiting period, potentially offsetting any savings from lower interest rates.

Homeowners who purchase a property at a higher interest rate can always take advantage of a mortgage refinance in the future when rates drop. Refinancing allows them to secure a lower interest rate and reduce their monthly payments, making it a viable option for those who can afford to wait.

Utah Mortgage Rate Trends

Understanding historical mortgage rate trends in Utah can provide valuable insight into potential future movements. By analyzing past rate fluctuations, homebuyers can make informed decisions about when to enter the housing market.

Utah’s mortgage rates have experienced fluctuations over the years, influenced by both national economic conditions and local market dynamics. While rates have risen in recent years, they remain below historical highs and are currently hovering around the 50-year average. (The FHFA stopped reporting on state interest rates after 2018.)

This historical perspective offers some reassurance to homebuyers, indicating that current rates are within the normal range and not exceptionally high by historical standards.

Historical U.S. Mortgage Rates

For a broader context, it may be helpful to consider historical U.S. mortgage rates. By comparing Utah’s rates to national trends, homebuyers can gain a deeper understanding of the market’s overall trajectory.

Factors Affecting Mortgage Rates in Utah

Numerous factors influence mortgage rates in Utah and across the nation. Understanding these factors empowers homebuyers to make informed decisions and anticipate potential rate movements.

Economic indicators, such as the federal funds rate, inflation, and unemployment, play a significant role in shaping mortgage rates. Additionally, borrower-specific factors, including credit score, down payment, income, assets, and loan type, also impact the rates offered by lenders.

While economic factors are largely external and beyond the control of individual homebuyers, there are certain aspects within their control that can influence their mortgage rates. By improving their credit score, increasing their down payment, and maintaining a steady income, homebuyers can position themselves to secure more favorable mortgage rates.

Economic Factors

Economic factors exert a substantial influence on mortgage rates, both in Utah and nationwide. Understanding these economic indicators can help homebuyers anticipate rate movements and make informed decisions.

•   The Fed: The Federal Reserve’s decisions regarding the federal funds rate have a ripple effect on the entire financial system, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates. Conversely, a decrease in the federal funds rate can result in lower mortgage rates.

•   Inflation: Inflation, characterized by a general increase in prices and a decrease in the purchasing power of money, can impact mortgage rates. As inflation rises, lenders may increase interest rates to protect their investments and compensate for the eroding value of money.

•   Unemployment: A low unemployment rate, indicative of a robust economy, can lead to higher mortgage rates. This is because increased economic activity and job growth stimulate demand for housing, driving up home prices and, consequently, mortgage rates.

Consumer Factors

In addition to economic factors, several consumer-specific factors play a role in determining mortgage rates. By understanding these factors, homebuyers can take steps to improve their financial profile and secure more favorable rates.

•   Credit score: In SoFi’s recent survey, more than one in 10 homebuyers (11%) said an insufficient credit score was one of the challenges they were facing. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. As a result, individuals with higher credit scores typically qualify for lower mortgage interest rates.

•   Down payment: A larger down payment reduces the loan amount required, making the borrower less risky in the eyes of the lender. Consequently, borrowers who can afford a larger down payment may be rewarded with a lower mortgage interest rate. A third of respondents (30%) to SoFi’s survey said they were planning to put down between 11% and 20%. One in five (19%) said they would put down 6% to 10%. Ten percent of buyers were aiming for a 5% down payment or less, and 7% of homebuyers were exploring no-down-payment options.

•   Income and assets:A steady income and substantial assets demonstrate a borrower’s financial stability and ability to repay the mortgage. Lenders view such borrowers as lower-risk and are more likely to offer them lower mortgage interest rates.

•  Type of mortgage loan: Different types of mortgage loans come with varying interest rates. Adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate, making them attractive to borrowers who plan to sell or refinance before the fixed-rate period ends. Government-backed loans, such as VA mortgages, may also offer lower rates. Additionally, shorter loan terms (10 or 15 years) typically come with lower rates than longer terms (30 years).

Recommended: Average Monthly Expenses for One Person

Types of Mortgages Available in Utah

Utah offers a diverse range of mortgage options to cater to the needs of different homebuyers. Understanding these mortgage types and their characteristics can help you choose the right one for your situation.

Conventional loans, which are not backed by government agencies, offer flexibility in terms of interest rates and loan amounts. They can be fixed-rate or adjustable-rate. Conventional loans have a maximum loan amount of $832,750 in most of Utah. However, the limit is $839,500 is Grand County, $997,050 in Wayne County, and $1,150,000 in Summit and Wasatch counties.

Fixed-Rate Mortgages

Fixed-rate mortgages provide peace of mind with a consistent interest rate for the entire loan term. This stability allows homebuyers to budget effectively and avoid the uncertainty associated with fluctuating rates.

Fixed-rate mortgages come with varying loan terms, typically ranging from 10 to 30 years. The choice of loan term depends on the borrower’s financial situation and preferences. Shorter loan terms result in higher monthly payments but allow for faster payoff of the loan, while longer loan terms offer lower monthly payments but extend the repayment period.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) provide an initial period of lower interest rates, followed by periodic adjustments based on market conditions. While ARMs can offer savings initially, they also carry the risk of higher payments in the future. Still, ARMs can be advantageous for borrowers who plan to sell or refinance their property before the initial fixed-rate period ends.

FHA Loan

FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with limited financial resources or less-than-perfect credit.

The FHA insures FHA loans, reducing the risk for lenders and allowing them to offer more favorable terms to borrowers. This insurance enables borrowers with lower credit scores or smaller down payments to obtain financing for their home purchases.

One drawback: FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, as well as monthly MIP for new homebuyers of 0.15% to .75% — most often 0.55%.

VA Loans

VA loans, provided by the Department of Veterans Affairs, offer exclusive benefits to eligible veterans, active-duty military members, and certain surviving spouses.

VA loans are specifically tailored to meet the needs of those who have served or are currently serving in the military. These loans provide unique advantages, such as no down payment requirement and competitive interest rates.

Borrowers obtain these loans from private lenders after first obtaining a certificate of eligibility from the VA.

USDA Loans

USDA loans, backed by the U.S. Department of Agriculture, are designed to assist low-income borrowers in purchasing homes in rural areas. These loans offer competitive interest rates and flexible credit requirements, making homeownership attainable for those who may not qualify for conventional financing.

The USDA’s backing of these loans ensures reduced risk for lenders and allows them to provide favorable terms to eligible borrowers.

Jumbo Loans

Jumbo loans are designed for borrowers who need to exceed the conventional loan limits (noted above) set by the Federal Housing Finance Agency (FHFA). These loans cater to individuals seeking higher loan amounts for more expensive properties. In most of Utah, the conforming loan limit for 2026 is $832,750. In Wayne County, it is $997,050. In Summit and Wasatch counties, the limit is $1,150,000.

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Popular Places to Get a Mortgage in Utah

Securing a mortgage often depends on choosing the right location, where home prices and the cost of living are affordable. Utah offers various cities and towns that cater to different homebuyers’ needs and budgets.

Job opportunities, housing inventory, and local amenities also factor into the attractiveness of a location for homebuyers. With a little due diligence, individuals can make informed decisions about where to purchase a property and secure a suitable mortgage.

The cost of living varies significantly across locations in Utah. Some cities, such as Park City and St. George, have higher costs of living compared to the state average, while others, like Cedar City and Price, offer more affordable living expenses. Understanding the cost of living in different areas can help homebuyers determine their budget and choose a location that aligns with their financial capabilities.

Least Expensive Locations

For homebuyers seeking affordability, several cities in Utah offer lower costs of living compared to the state average and the cost of living in the U.S. These locations provide opportunities for individuals to secure a mortgage and purchase a home without straining their budget.

The Cost of Living Index (COLI) ranks states and cities against the national average, with values above 100 being more expensive, and values below 100 more affordable.

•   Kaysville average home value $635,484; COLI 114.6

•   Spanish Fork $495,479 ; COLI 117.2

•   South Ogden $415,374 ; COLI 107.2

•   Orem $483,127 ; COLI 117.2

•   Nibley $477,884 ; COLI 102.2

Most Expensive Locations

On the other end of the spectrum, certain cities in Utah are known for their sky-high housing costs. While these locations may offer desirable amenities and job opportunities, they require a higher income and a larger budget to secure a mortgage and purchase a property in line with average home values:

•   Alpine $1,049,415

•   Park City $1,559,039

•   Alta $1,589,280

•   Granite $1,092,374

•   Hideout $1,567,227

Recommended: Do You Qualify as a First-Time Homebuyer

Tips for Securing a Competitive Mortgage Rate in Utah

Obtaining a competitive mortgage rate allows homebuyers to save money over the life of a loan. By following these tips, homebuyers in Utah can increase their chances of securing the best possible interest rate.

Compare Interest Rates and Fees

Homebuyers should diligently compare interest rates and fees from multiple lenders to ensure they are getting the best deal. It’s important to consider not only the headline interest rate but also any associated fees, such as origination fees, appraisal fees, and discount points.

By comparing multiple offers, homebuyers can identify the lender that provides the most favorable combination of interest rate and fees. This comprehensive comparison empowers them to make an informed decision that aligns with their financial goals.

Get Preapproved

Getting preapproved for a mortgage strengthens a homebuyer’s position in the real estate market and allows them to move quickly when they find the right property.

Preapproval involves submitting financial information to a lender, who then evaluates the borrower’s creditworthiness and determines the maximum loan amount they are eligible for. This process provides homebuyers with a clear understanding of their borrowing power. The mortgage preapproval process can take up to 10 days, but will likely pay off down the road.

Utah Mortgage Resources

Utah offers several programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. These resources provide valuable support and guidance throughout the homebuying process.

First-Time Homebuyer Programs

First-time homebuyers in Utah can benefit from several programs designed to make homeownership more accessible. The Utah Housing Corporation (UHC) FirstHome program offers first-timers with a credit score of 660 and higher the lowest available interest rate on a first mortgage; income and purchase limits apply. UHC also offers a grant of $2,500 to first-time homebuyers in Utah who are veterans.

Down Payment Assistance

Down payment assistance programs in Utah provide financial support to help homebuyers overcome the hurdle of saving for a down payment. UHC offers a second mortgage for down payment assistance, as part of its FirstHome program. See link above for details and eligibility.

Tools & Calculators

SoFi online tools and calculators are available to help homebuyers estimate their monthly mortgage payments, compare interest rates, and calculate affordability. These tools empower homebuyers to make informed decisions and plan their finances effectively.

Refinancing Options in Utah

Homeowners in Utah have the opportunity to refinance their existing mortgages to secure lower interest rates, reduce monthly payments, or access cash for other financial needs.

The FHA Streamline Refinance program offers a simplified and cost-effective way for FHA-insured homeowners to refinance their mortgages. It allows borrowers to obtain lower interest rates without the need for a new appraisal or extensive documentation.

VA Interest-Rate Reduction Refinance Loans (IRRRL) provide an opportunity for VA loan holders to lower their interest rates and reduce their monthly mortgage payments. This program allows eligible veterans and active-duty military members to refinance their VA loans without the need for a new appraisal or full credit check.

Closing Costs, Taxes, and Fees in Utah

Homebuyers in Utah can expect to pay various closing costs, taxes, and fees associated with purchasing a property. Closing costs in Utah typically range between 2% and 5% of the purchase price of the home. These costs include title insurance, appraisal fees, recording fees, and lender fees. It’s important for homebuyers to factor these costs into their budget when planning for a home purchase.

The specific closing costs associated with a property can vary depending on its value and location. Higher-priced properties and those located in certain areas may incur higher closing costs. Homebuyers should carefully review the closing disclosure provided by the lender to understand all associated costs and ensure they have sufficient funds to cover them.

The Takeaway

Utah offers a range of options for homebuyers, catering to diverse 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 successful homeownership in the Beehive State.

FAQ

Will mortgage rates drop in Utah?

Predicting future mortgage rate movements is challenging due to the influence of various economic factors. However, homebuyers can monitor market trends, stay informed about economic indicators, and consult with local mortgage professionals to make informed decisions about when to purchase a home or refinance their mortgage.

Will mortgage rates ever go back to normal?

The definition of “normal” mortgage rates can be subjective and influenced by historical trends and individual expectations. Mortgage rates fluctuate over time based on economic conditions, and what is considered normal can vary. It’s important for homebuyers to understand current market conditions and make decisions based on their financial situation and long-term goals.

Will Utah home prices ever drop?

Utah’s housing market is influenced by various factors, including economic conditions, population growth, and supply and demand dynamics. Predicting future home price movements is challenging, and past performance does not guarantee future results. Homebuyers should carefully evaluate their financial situation, consider market trends, and consult with real estate professionals to make informed decisions about purchasing a property.

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

The decision of whether it’s a good time to buy a house in Utah depends on individual circumstances, financial readiness, and market conditions. Homebuyers should consider factors such as mortgage rates, home prices, their financial stability, and long-term plans. Consulting with real estate professionals and financial advisors can provide valuable insights and help individuals make informed decisions about purchasing a property.

How to lock in a mortgage rate?

To lock in a mortgage rate, homebuyers can work with a lender to secure a specific interest rate for a period ranging from 30 to 90 days. This process involves paying a fee to the lender, known as a rate lock fee. By locking in a rate, homebuyers protect themselves from potential interest rate increases during the lock-in period.

How do mortgage interest rates work?

Mortgage interest rates are determined by various factors, including the federal funds rate set by the Federal Reserve, inflation, unemployment rates, and borrower-specific factors such as credit score, down payment, and loan type. Lenders use these factors to assess the risk associated with a loan and set the interest rate accordingly. Homebuyers can improve their chances of securing a lower interest rate by maintaining a good credit score, increasing their down payment, and choosing a shorter loan term.

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-Q324-099

Compare mortgage rates in Washington.

Introduction to Mortgage Interest Rates

Securing a competitive mortgage rate is crucial for saving money over the life of your home loan. Mortgage interest rates drive the amount a lender charges for borrowing money to purchase a home. In Washington state, mortgage rates are influenced by various economic factors and consumer characteristics. This comprehensive guide provides an in-depth look at mortgage rates in Washington, including historical trends, factors affecting rates, type of mortgage loans available, and strategies for securing a competitive rate.

Where Mortgage Rates Come From

The Federal Reserve, also known as the Fed, plays a pivotal role in determining mortgage rates. The Fed sets the short-term interest rates that banks use as a benchmark for setting their own rates. Although home loan rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed raises interest rates, mortgage rates generally rise, and when the Fed lowers rates, mortgage rates typically decline.

But there are also consumer factors that influence rates, including the homebuyer’s credit score, down payment, income, and assets.

How Interest Rates Affect Home Affordability

Mortgage rates have a significant impact on home affordability, often playing a more substantial role than the purchase price of the home itself. Even small changes in interest rates can significantly affect the monthly mortgage payments and the overall cost of homeownership.

For instance, a $300,000 loan with a 30-year term and an interest rate of 4.00% would result in monthly payments of $1,432. If the interest rate increases by just 1 percentage point to 5.00%, the monthly payments would jump to $1,610, adding up to a difference of over $64,000 in total interest paid over the life of the loan.

Should Homebuyers Wait for Interest Rates to Drop?

Many homebuyers, especially novices buying a first home, face the dilemma of whether to purchase a home immediately or wait for interest rates to drop. While it is impossible to predict the future of interest rates with certainty, reading the news about the Fed’s potential action on its rates can help homebuyers make an informed decision.

But ultimately, whether to buy or wait may depend on your personal situation. A lease ending or a baby coming can press the issue. And in some markets, home prices may be rising, which could outweigh any savings on a minor interest rate drop.

Homebuyers who are concerned about rising interest rates may consider locking in a rate now and refinancing later if rates decrease. Most lenders offer a rate lock option, which allows borrowers to secure a specific interest rate for a certain period of time, typically ranging from 30 to 90 days. This can provide peace of mind and protect against potential rate increases during the homebuying process.

Recommended: Average Monthly Expenses for One Person

Washington Mortgage Rate Trends

Understanding historical mortgage rate trends can provide perspective on current rates. Below is a look at almost two decades of Washington rates (the Federal Housing Finance Agency stopped tracking states in 2018). As you can see, Washington’s average rate tends to be a little lower than the U.S. average. This is impressive when you consider that the overall cost of living in Washington is above the national average.

Historical U.S. Mortgage Rates

Looking at the U.S. average rate over a few decades offers further insight. Mortgage rates in Washington state are still below the historical highs experienced in the early 1980s, when rates reached over 18%.

Factors Affecting Mortgage Rates in Washington

Numerous factors influence mortgage rates in Washington and nationwide. Rates are determined by a complex combination of factors that can be broadly categorized into two buckets: the state of the economy and the borrower’s financial status. Let’s examine each in more detail:

Economic Factors

Economic factors that affect mortgage rates include the federal funds rate, inflation, and unemployment rate.

•  The Fed: As mentioned earlier, the federal funds rate set by the Federal Reserve is a key determinant of mortgage rates. When the Fed raises the federal funds rate, banks typically increase their interest rates, including those for mortgages. Conversely, when the Fed lowers the federal funds rate, mortgage rates tend to decrease.

•  Inflation: The general increase in prices of goods and services over time may affect mortgage rates. When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, lenders may increase interest rates.

•  Unemployment: When the unemployment rate (the percentage of the labor force that is unemployed) is high, the Fed may lower its rates to try to stimulate the labor market.

Consumer Factors

Consumer factors that affect mortgage rates include credit score, down payment, income and assets, and the type of mortgage loan.

•  Credit score: This numerical representation of an individual’s credit history and repayment behavior is a key detail lenders examine. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. Individuals with higher credit scores typically qualify for lower mortgage interest rates.

•  Down payment: A larger down payment reduces the amount of money that needs to be borrowed, which lowers the risk for the lender. Consequently, borrowers who make a larger down payment often receive lower mortgage interest rates.

•  Income and assets: A steady income and sufficient assets provide assurance to lenders that the borrower can meet their financial obligations. Borrowers with stable employment, a history of consistent income, and a healthy financial cushion are more likely to secure favorable mortgage rates.

•  Type of mortgage loan: Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA loans and FHA loans, may offer lower rates than conventional loans. And shorter loan terms generally come with lower interest rates than longer terms.

Types of Mortgages Available in Washington

Various mortgage types — including fixed-rate, adjustable-rate, FHA, VA, and USDA loans — are available to meet the needs of different homebuyers in Washington. Conventional loans are not insured by the government and are offered by banks and credit unions. They are the most popular type of mortgage loan and can be fixed-rate or adjustable-rate.

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 stable and predictable, which protects against fluctuating mortgage interest rates. These mortgages are available in various terms, commonly ranging from 10 to 30 years. The choice of loan term affects the monthly payment amount and the total interest paid over the life of the loan. Shorter loan terms generally have higher monthly payments but lower total interest paid, while longer loan terms have lower monthly payments but higher total interest paid.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) start with a lower introductory interest rate, typically fixed for a period of 5, 7, or 10 years. After the introductory period, the interest rate can adjust periodically, usually once a year, based on a specified index. This can result in fluctuations in monthly mortgage payments.

The initial lower interest rate of ARMs can be attractive to borrowers who plan to sell their home or undertake a mortgage refinance before the introductory interest-rate period ends. However, it is important to carefully consider the potential for future interest rate increases and the impact they may have on monthly payments.

FHA Loans

Backed by the Federal Housing Administration, FHA loans are designed to make homeownership more accessible to borrowers with lower credit scores and smaller down payments. FHA loans typically have more flexible credit and income requirements compared to conventional loans, making them a good option for people who qualify as a first-time homebuyer or those with less-than-perfect credit.

The FHA insurance program reduces the risk to lenders by guaranteeing a portion of the loan amount. This allows lenders to offer FHA loans with more favorable terms, including lower down payments and more flexible credit requirements. FHA loans require both an upfront and monthly mortgage insurance premium (MIP), an additional cost which can be rolled into the borrower’s monthly payment. Even with this cost, an FHA loan can put homeownership within reach for many who could not otherwise qualify.

VA Loans

VA loans are offered by the U.S. Department of Veterans Affairs (VA) to eligible veterans, active-duty military personnel, Reserve and National Guard members, and surviving spouses. VA loans provide competitive interest rates and do not require a down payment, making them an attractive option for qualified borrowers.

The first step for anyone interested in a VA loan is to obtain a Certificate of Eligibility
from the VA.

USDA Loans

USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. Provided by the U.S. Department of Agriculture (USDA), these loans are available to borrowers who fall below a defined income threshold. They offer competitive interest rates and do not require a down payment, making them an attractive option for eligible borrowers in rural communities. The USDA guarantees a portion of USDA loans, reducing the risk to lenders and allowing them to offer favorable terms to eligible borrowers.

Jumbo Loans

In most parts of the U.S., conventional mortgage loans have a cap of $832,750 in 2026 for a single-family home. This cap is set by the Federal Housing Finance Agency (FHFA) and is known as the conforming-loan limit. But sometimes buyers need to borrow more, and that’s where jumbo loans come in. These are also known as nonconforming loans.

Conforming loan levels are set by county, and most counties in Washington have the standard $806,500 limit. But in a few higher-priced housing markets, such as King County (Seattle), Pierce County (Tacoma), and Snohomish County, the limit is higher: $1,037,300.

Popular Places to Get a Mortgage in Washington

Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Some areas in Washington offer more affordable housing options and a lower cost of living, making them an attractive place to purchase a home.

Least Expensive Locations

Here are some of the least expensive locations in Washington to get a mortgage, based on median home prices and cost of living data, benchmarks used in SoFi’s best affordable places in the U.S. guide. Remember, Washington is costlier than the U.S. average. The average home value in the state is $591,888:

•   Port Angeles: The overall cost of living here is 13% below the state average, and the average home value is $447,800.

•   Bellingham: This northern city has a below-average cost of living. The average home value here is $653,330.

•   Olympia: The average home price in this city with easy access to both forests and waterfront is $532,406. Its cost-of-living index is slightly below the state average.

•   Yakima: With an average home value of $347,826 and a very low cost-of-living index, this is one of the least expensive cities in the entire state.

•   Spokane: Its cost of living is 10% below average, and the median home value is $389,697.

Most Expensive Locations

As is often the case, large cities are on the pricier side when it comes to buying a home. Seattle, where the cost of living is the second highest in the state, has an average home value of $851,242 while Redmond, Bellevue, and Bainbridge Island all have home prices well north of $1 million.

Tips for Securing a Competitive Mortgage Rate in Washington

A competitive mortgage rate is crucial for saving money over the life of a loan. As noted above, even a small difference in interest rate can result in thousands of dollars in savings over the life of a mortgage. Here are some ways to securing a competitive mortgage rate in the current environment in Washington:

Compare Interest Rates and Fees

Take the time to compare interest rates and fees from multiple lenders. In addition to the interest rate, it is important to consider any upfront costs or closing fees associated with the loan. These fees can vary between lenders and can add to the overall cost of the mortgage.

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. Going through the mortgage preapproval process demonstrates to sellers that you are a serious and qualified buyer.

Washington Mortgage Resources

Washington offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Some programs offer assistance with down payments and closing costs.

First-Time Homebuyer Programs

Washington state offers several programs to assist first-time homebuyers, including:

•   Washington State Housing Finance Commission (WSHFC) Covenant Homeownership Program is for eligible first-time homebuyers. Eligibility criteria include: The homebuyer or a parent/grandparent/great-grandparent must have lived in Washington state before April 1968 and be Black, Hispanic, Native American, Alaska Native, Native Hawaiian or other Pacific Islander*, Korean or Asian Indian.

•   Home Advantage and House Key Opportunity Programs also help homebuyers, who must take an education course to learn more about the homebuying process before working with the program loan officers.

•   USDA, FHA, and VA loans are also available in Washington State.

Down Payment Assistance

In addition to first-time homebuyer programs, Washington state also offers down payment assistance programs to help eligible borrowers:

•   WSHFC Down Payment Assistance Program down payment assistance is for homebuyers who use the agency’s Home Advantage or Opportunity programs. If your household income is under the program limits (up to $180,000), your credit score is at least 620, and you’re otherwise qualified for a home loan, you are probably eligible.

Tools & Calculators

The WSHFC website provides a variety of tools and calculators to help homebuyers estimate their monthly mortgage payments, determine their borrowing power, and compare different loan options.

Refinancing Options in Washington

The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. For example, there is rarely the need for a new appraisal or full credit check.

VA loan holders may be eligible for an Interest-Rate Reduction Refinance Loan (IRRRL), which allows them to refinance their existing VA loan into a new loan with a lower interest rate without the need for a new appraisal or full credit check.

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

Closing Costs, Taxes, and Fees in Washington

Buyers in Washington can expect to pay between 3%-6% of the home’s purchase price in closing costs.

The Takeaway

Mortgage rates in Washington are influenced by a variety of factors, including the Federal Reserve’s monetary policy and each homebuyer’s personal financial profile. Homebuyers should carefully consider their financial situation and the current mortgage rate environment before making a decision about whether or not to purchase a home. Fortunately, there are a number of resources available to help homebuyers in Washington get the best possible mortgage rate.

FAQ

What is a mortgage rate?

A mortgage rate is the interest rate that you pay on your mortgage loan. It is expressed as a percentage and is added to the principal amount of the loan to determine your monthly payments.

Will mortgage rates drop in Washington?

It is difficult to predict whether or not mortgage rates will drop in Washington. However, there are a number of factors that could affect mortgage rates, including unemployment, inflation, and the Federal Reserve’s monetary policy.

Will mortgage rates ever go back to normal?

It is difficult to say when or if mortgage rates will ever go back to normal because there isn’t really a “normal” rate. Current mortgage rates are due to a number of factors, each of which can change at any time.

Will Washington home prices ever drop?

It is difficult to predict whether or not Washington home prices will ever drop. However, there are a number of factors that could affect home prices, including the overall economy, the supply of homes on the market, and the demand for homes.

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

Whether or not it is a good time to buy a house in Washington depends on your individual financial situation and goals. There are a number of factors to consider, including the current mortgage rate environment, the cost of homes in your desired area, and your long-term plans.

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 certain interest rate for a specified period of time. This can protect you from rising interest rates.

How do mortgage interest rates work?

Mortgage interest rates are determined by a number of factors, including the Federal Reserve’s monetary policy. When the economy is strong and inflation is low, mortgage rates tend to be lower. Conversely, when the economy is weak and inflation is high, mortgage rates tend to be higher.

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.

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