Compare mortgage rates in Massachusetts.

Introduction to Mortgage Rates

Mortgage interest rates play a huge role in determining the overall cost of a home. These rates are influenced by a multitude of factors, broadly categorized into two groups: the state of the economy and the borrower’s financial status.

Lenders consider a borrower’s credit score, income, assets, and the property’s value, among other factors, to determine the appropriate interest rate. Economic factors that impact mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate.

This comprehensive guide provides Massachusetts house hunters with valuable insights into mortgage rates, helping you navigate the complexities of the mortgage market and make well-informed decisions.

Where Do Mortgage Rates Come From?

The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use. These serve as a benchmark for home loan rates. When the Fed lowers its interest rate, mortgage rates tend to follow. Other economic conditions and market dynamics also play a role in shaping mortgage rates.

How Interest Rates Affect Home Affordability

Mortgage rates have a profound impact on home affordability, something often overlooked by homebuyers. Even seemingly small changes in interest rates can significantly influence the monthly mortgage payments and the overall cost of purchasing a home.

For instance, a difference of just one percentage point in the interest rate can translate into tens of thousands of dollars over the life of a 30-year mortgage. This highlights the importance of carefully considering interest rates when making home-buying decisions.

Should Homebuyers Wait for Interest Rates to Drop?

Many first-time homebuyers grapple with the dilemma of whether to purchase a home immediately or wait for interest rates to decrease. Here are a few considerations that can help you make an informed decision.

Waiting for interest rates to drop may seem like a prudent strategy, but remember that rates have been known to rise unexpectedly. Homebuyers should also consider the opportunity cost of delaying a purchase, as home prices may appreciate during the waiting period.

If you move forward with your home purchase and rates do drop, you can always turn to a mortgage refinance (more on that to come). This option provides flexibility and enables homebuyers to take advantage of favorable market conditions without having to wait for the ideal interest rate.

Recommended: Best Affordable Places in the U.S.

Massachusetts Mortgage Rate Trends

Understanding historical mortgage rate trends in Massachusetts can provide valuable insight into potential future rate movements. While rates have experienced fluctuations over the years, they remain within reasonable ranges compared to historical highs.

Currently, mortgage rates in Massachusetts hover around the 50-year average, indicating a relatively stable market. However, it’s wise for homebuyers to stay informed about economic conditions and market trends. By monitoring mortgage rate trends and staying updated on economic news, homebuyers can better anticipate potential rate changes and plan accordingly.

Historical U.S. Mortgage Rates

To provide a broader perspective, it is helpful to examine historical U.S. mortgage rates. Over the past few decades, rates have experienced periods of both stunning highs and unusual lows. By studying historical rate trends, homebuyers can gain a deeper understanding of the cyclical nature of mortgage rates and make more informed decisions about their home-buying timeline.

Factors Affecting Mortgage Rates in Massachusetts

Numerous factors influence mortgage rates in Massachusetts and across the country. As noted above, these factors can be broadly categorized into economic conditions and consumer-specific considerations.

While individuals have no control over larger economic forces, homebuyers do have control over a number of variables that influence the mortgage rates they’re offered.

Economic Factors

First, let’s take a closer look at the economic factors at work to determine mortgage rates:

•   The Fed: The Fed’s decisions have an indirect impact on mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to a potential increase in mortgage rates. Conversely, when the Fed lowers the federal funds rate, borrowing becomes cheaper, which can result in more favorable mortgage rates for homebuyers.

•   Inflation: Inflation, measured by the Consumer Price Index (CPI), reflects the rate at which the prices of goods and services increase over time. When inflation rises, the purchasing power of money decreases, and consumers observe an escalation in the cost of living. But inflation also makes it more expensive for lenders to lend money. As a result, lenders may increase interest rates to compensate for the loss in purchasing power, leading to higher mortgage rates.

•   Unemployment rate: The unemployment rate is a key indicator of the overall health of the economy. A low unemployment rate generally signifies a strong economy, which often leads to increased demand for housing. This increased demand can put upward pressure on home prices and, consequently, mortgage interest rates.

Consumer Factors

Here’s the best part. Consumer-specific factors also play a role in determining mortgage rates. These are the things that savvy individuals can change and improve.

•   Credit score: A credit score is a numerical representation of your creditworthiness. It’s based on your payment history, credit utilization, and length of credit history, among other things. 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: The down payment is the upfront payment made by the homebuyer towards the purchase of a property. The median down payment for a house is 15%, according to the National Association of Realtors. But a 20% down payment — or even more — is the ideal. A larger down payment reduces the loan amount required from the lender, which lowers the risk for the lender. Consequently, borrowers who make a larger down payment often receive lower mortgage interest rates.

•   Income and assets: Lenders carefully assess a borrower’s income and assets to determine their ability to repay the mortgage. A steady income and sufficient assets provide assurance to lenders that the borrower can meet their financial obligations. Borrowers with stable income and substantial assets are more likely to secure lower mortgage interest rates.

•   Type of mortgage loan: The type of mortgage loan you choose can also impact the interest rate. For example, adjustable-rate mortgages (ARMs) typically offer lower initial rates compared to fixed-rate mortgages. Additionally, government-backed loans, such as VA loans, may have lower rates. And a shorter loan term generally comes with a lower interest rate than longer terms.

Types of Mortgages Available in Massachusetts

Massachusetts offers a diverse range of mortgage types to cater to the needs of different homebuyers.

Conventional loans are not backed by the government and typically offer competitive interest rates. They can be fixed-rate or adjustable-rate, and typically require a credit score of 620 or higher.

Fixed Rate Mortgage

A fixed-rate mortgage offers stability and predictability. With a fixed-rate mortgage, the interest rate remains the same for the entire loan term. This provides peace of mind to borrowers, as they can accurately budget their monthly mortgage payments without worrying about fluctuating interest rates.

Fixed-rate mortgages are available in various terms, ranging from 10 to 30 years. The choice of loan term impacts the monthly payment amount and the total interest paid over the life of the loan. Shorter loan terms generally result in higher monthly payments but lower total interest paid, while longer loan terms have lower monthly payments but higher total interest.

Adjustable Rate Mortgage

ARMs entice borrowers with lower initial interest rates compared to fixed-rate mortgages. This can be advantageous for homebuyers seeking a lower initial monthly payment. However, the interest rate can adjust periodically, potentially leading to higher monthly payments in the future.

The initial lower interest rate of ARMs can provide cost savings for homebuyers planning to sell their property before the fixed-rate period ends. However, you must carefully consider whether you could financially handle a higher interest rate and monthly payment.

FHA Loan

FHA loans, backed by the Federal Housing Administration, offer more relaxed credit and income requirements compared to conventional loans. This makes them an attractive option if you’re buying your first home or have less-than-perfect credit. FHA loans also allow for lower down payments, making homeownership more accessible.

VA Loans

VA loans are exclusively available to veterans, active-duty military members, certain members of the Reserve and National Guard, and their spouses. These loans provide competitive interest rates and do not require a down payment. Getting a Certificate of Eligibility (COE) is the first step to a VA loan.

USDA Loans

USDA loans, provided by the U.S. Department of Agriculture, cater to low-income borrowers seeking to purchase a home in a rural area. These loans offer competitive interest rates and do not require a down payment, making homeownership more attainable for eligible individuals.

Jumbo Loans

Conventional mortgage loans have a maximum loan amount, known as the conforming loan limit, set by the Federal Housing Finance Agency (FHFA). For 2026, the conforming loan limit for a single-family home in Massachusetts is $832,750, with the exception of Essex, Middlesex, Norfolk, Plymouth, and Suffolk counties, where the limit is $962,550, and Dukes and Nantucket counties, where the limit is $1,249,125.

Jumbo loans are designed for properties that exceed the conforming loan limit. These loans are offered by private lenders and typically carry higher interest rates compared to conventional loans due to the increased risk associated with larger loan amounts.

Popular Places to Get a Mortgage in Massachusetts

Various factors contribute to the attractiveness of a location for obtaining a mortgage, including cost of living, job opportunities, and housing market conditions.

The cost of living in Massachusetts is relatively high: 27.5% higher than the national average. Of course, costs do vary from town to town, as you’ll see below.

Least Expensive Locations

Certain Massachusetts locations offer relatively lower housing prices and more affordable cost of living, making them attractive options for homebuyers seeking value. Here are some of the least expensive locations in Massachusetts for obtaining a mortgage, along with the average home value:

•   Greenfield $324,949

•   North Adams $247,942

•   Pittsfield $299,910

•   Holyoke $313,177

•   Chicopee $303,273

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

Most Expensive Locations

Then there are areas where the average monthly expenses for one person, or a family, is much higher, with home prices to match. These are the most expensive locations in Massachusetts for obtaining a mortgage, with their average home value:

•   Boston $750,816

•   Cambridge $1,004,826

•   Newton $1,456,147

•   Wellesley $1,918,005

•   Brookline $1,141,809

Tips for Securing a Competitive Mortgage Rate in Massachusetts

Obtaining a competitive mortgage rate can significantly impact the overall cost of homeownership: Even a slight difference in the interest rate can result in substantial savings over the long term. Therefore, homebuyers are advised to research and compare mortgage rates from multiple lenders to secure the best possible rate.

For instance, a difference of just 0.5% in the interest rate on a 30-year mortgage of $300,000 can amount to a difference of over $34,000 in total interest paid. This highlights the significance of securing a competitive mortgage rate.

Compare Interest Rates and Fees

You don’t have to settle for the first mortgage offer you receive — and you shouldn’t. Shop around and compare interest rates and fees from multiple lenders to ensure you are getting the best deal.

In addition to the interest rate, inquire about any upfront costs or closing fees associated with the loan. These fees can vary among lenders and can add to the overall cost of the mortgage.

How to Get Preapproved

Getting preapproved for a mortgage demonstrates to sellers that the homebuyer is a serious and qualified buyer. It also allows homebuyers to move swiftly when they find a suitable property, as they already have a clear understanding of their borrowing power.

Unlike prequalification, which can be completed online quickly, the mortgage preapproval process can take up to 10 days.

Massachusetts Mortgage Resources: Assistance for Homebuyers

Massachusetts offers a variety of resources and programs to assist homebuyers, including down payment assistance programs, affordable housing options, and counseling services to help homebuyers navigate the mortgage process.

First-Time Homebuyer Programs

Massachusetts provides several programs tailored to first-time homebuyers. To qualify as a first-time homebuyer, you must not have had an ownership interest in a principal residence within the last three years.

The My Mass Mortgage: ONE Mortgageprogram offers 30-year fixed-rate loans to low- and moderate-income first-time homebuyers. You can pay a 3% or 5% down payment, depending on the type of home you’re purchasing, and no private mortgage insurance is required. MassHousing Loan provides low-interest fixed-rate loans and mortgage payment protection; requirements include an income limit, minimum credit score, and homebuyer education.

Down Payment Assistance

Down payment assistance programs can help homebuyers overcome the challenge of saving for a down payment. MassHousing Down Payment Assistance offers up to $30,000 to cover your down payment.

Tools & Calculators

Online tools and calculators can help you estimate mortgage payments, compare loan options, and make informed financial decisions.

Refinancing Options in Massachusetts: Exploring Your Possibilities

Refinancing a mortgage can help homeowners secure a lower interest rate, reduce their monthly payments, or access cash for other purposes.

•  The FHA Streamline Refinance program allows homeowners with FHA-insured loans to refinance into current mortgage rates with minimal documentation and without the need for a new appraisal.

•  The Interest-Rate Reduction Refinance Loan (IRRRL) is available to veterans and active-duty military members with VA loans. It allows borrowers to refinance into a lower interest rate without the need for a new appraisal.

Closing Costs and Fees in Massachusetts: What to Expect

Closing costs in Massachusetts typically range from 2% to 5% of the purchase price of the home. These costs include loan origination fees, appraisal fees, title insurance, and other administrative fees.

The specific closing costs associated with a home purchase in Massachusetts can vary depending on the property value and location. Higher-priced homes and properties in certain areas may incur higher closing costs.

The Takeaway

Massachusetts presents a diverse range of mortgage options, catering to the unique needs and financial situations of homebuyers: From fixed-rate to adjustable-rate mortgages, government-backed loans to conventional loans. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, homebuyers in Massachusetts can make informed decisions that align with their financial goals and achieve successful homeownership.

FAQ

What is a mortgage rate?

A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest paid over the life of the loan and significantly impacts the monthly mortgage payment.

Will mortgage rates drop in Massachusetts?

Predicting future interest rate movements is uncertain. While rates can fluctuate, there is no guarantee that they will drop significantly in the short term. Homebuyers should carefully consider their financial situation, housing needs, and long-term plans when deciding whether to wait for lower interest rates or proceed with a purchase at current rates.

Will mortgage rates ever go back to normal?

The definition of “normal” interest rates is subjective and influenced by historical trends and market conditions. Mortgage rates have fluctuated over time and can be affected by various economic factors. It is difficult to predict when or if rates will return to a specific level.

Will Massachusetts home prices ever drop?

Real estate markets are influenced by supply and demand, economic conditions, and local factors. Predicting future home price trends is complex and uncertain. While prices can fluctuate, there is no guarantee that they will drop significantly in the short term. Homebuyers should carefully consider their financial situation, housing needs, and long-term plans when making decisions about purchasing a home.

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

The decision of whether to buy a house depends on various personal and financial factors. There is no one-size-fits-all answer. Homebuyers should consider their financial stability, housing needs, long-term plans, and the local real estate market conditions when making a decision.

How to lock in a mortgage rate?

Borrowers can lock in a mortgage rate by paying a fee to the lender to secure the current rate for a specific period. This can protect borrowers from potential interest rate increases during the loan application process.

How do mortgage interest rates work?

Mortgage interest rates are determined by various factors, including the borrower’s credit score, the loan-to-value ratio (LTV), and prevailing market conditions. Lenders use these factors to assess the risk associated with a loan and set interest rates accordingly.

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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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.

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-Q324-062

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