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The current average mortgage rate on a 30-year fixed mortgage is 7.52%, according to Curinos. The average rate on a 15-year mortgage is 6.74%, while the average rate on a 30-year jumbo mortgage is 7.41%.
Borrowers paid an average rate of 7.52% on a 30-year mortgage. This was up from the previous week's rate of 7.35%.
Currently, the average annual percentage rate (APR) on a 30-year fixed-rate mortgage is 7.44%. This is higher than last week when the APR was 7.26%. The APR contains both mortgage interest and the lender fees to help give a more complete picture of loan costs.
To get an idea of how much you'll pay: a $100,000 mortgage with a 30-year fixed-rate loan at the current average interest rate of 7.52% will cost you about $701 including principal and interest (taxes and fees not included) each month, the Forbes Advisor mortgage calculator shows. That's around $152,260 in total interest over the life of the loan.
With an interest rate of 6.74%, you would pay $884 per month in principal and interest for every $100,000 borrowed. Over the life of the loan, you would pay $59,204 in total interest.
The current average interest rate on a 30-year fixed-rate jumbo mortgage is 7.41%. Last week, the average rate was 7.30%.
If you lock in today's rate of 7.41% on a 30-year, fixed-rate jumbo mortgage, you will pay $693 per month in principal and interest per $100,000 in financing. That means that on a $750,000 loan, the monthly principal and interest payment would be around $5,197, and you'd pay around $1.12 million in total interest over the life of the loan.
The annual percentage rate, or APR, encompasses the mortgage interest rate and lender fees over the total life of the loan. It's important because it can give homebuyers a more complete picture of total costs, not just the interest rate.
Comparing APR among lenders is a better way to see overall costs because it will show you everything from interest rate to fees.
Multiple factors affect the interest rate for a mortgage, including the economy's overall health, benchmark interest rates and borrower-specific factors.
The Federal Reserve's rate decisions and inflation can influence rates to move higher or lower. Although the Fed raising rates doesn't directly cause mortgage rates to rise, an increase to its benchmark interest rate makes it more expensive for banks to lend money to consumers. Conversely, rates tend to decrease during periods of rate cuts and cooling inflation.
Home buyers can make several moves to improve their finances and qualify for competitive rates. One is having a good or excellent credit score, which ranges from 670 to 850. Another is maintaining a debt-to-income (DTI) ratio below 43%, which implies less risk of being unable to afford the monthly mortgage payment.
Further, making a minimum 20% down payment can help you avoid private mortgage insurance (PMI) on conventional home loans. If you can afford the larger monthly payment, 15-year home loans have lower rates than a 30-year term.
Conventional home loans are issued by private lenders and typically require good or excellent credit and a minimum 20% down payment to get the best rates. Some lenders offer first-time home buyer loans and grants with relaxed down payment requirements as low as 3%.
For buyers with limited credit or finances, a government-backed loan is usually the better option as the minimum loan requirements are easier to satisfy.
For example, FHA loans can require 3.5% down with a minimum credit score of 580 or at least 10% down with a credit score between 500 and 579. However, upfront and annual mortgage insurance premiums can apply for the life of the loan.
Buyers in eligible rural areas with a moderate income or lower may also consider USDA loans. This program doesn't require a down payment, but you pay an upfront and annual guarantee fee for the life of the loan.
If you come from a qualifying military background, VA loans can be your best option. First, you don't need to make a down payment in most situations. Second, borrowers pay a one-time funding fee but don't pay an annual fee as the FHA and USDA loan programs require.