Today’s mortgage and refinance rates

Markets were closed yesterday for Martin Luther King Jr. Day. And average mortgage rates just inched higher last Friday.

So far this morning, it’s looking as if mortgage rates today might rise again. However, there’s always a chance that could change as the hours pass.

Current mortgage and refinance rates

Should

Today’s mortgage and refinance rates

Markets were closed yesterday for Martin Luther King Jr. Day. And average mortgage rates just inched higher last Friday.

So far this morning, it’s looking as if mortgage rates today might rise again. However, there’s always a chance that could change as the hours pass.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

Last Friday, I promised I’d review my personal rate lock recommendations once I’d had a chance to gauge the Federal Reserve’s reaction to recent economic data. And we’ll be getting hints from top Fed officials starting today.

So, for now, those recommendations remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Regular readers may be growing concerned about my continuing obsession with the gap between the expectations of the Federal Reserve and investors for future interest rates. And you’re right! I am obsessed. But only because that’s currently the biggest threat to mortgage rates.

Mortgage rates have had a great run since Jan. 6. That day brought December’s employment data that investors thought made it more likely the Fed would slow its rate hikes further. And that feeling was reinforced when, on Jan. 12, the consumer price index showed prices falling that month.

But will the Fed actually change course over its rate increases? Markets are betting heavily that it will, which is why mortgage rates are currently as low as they are.

This week, we’ll have a better idea of how secure those wagers (and relatively lower mortgage rates) are. Because a number of top Fed officials will be making speeches or media appearances. And that kicks off today when New York Fed President John Williams speaks at the World Economic Forum in Davos, Switzerland.

Other influences on mortgage rates this week

Remarks by these Fed speakers may prove the most influential drivers of changes in mortgage rates this week. But there are some economic reports that could also move those rates.

And most of those land tomorrow. That day, we’ll get retail sales, the producer price index (a forward-looking measure of inflation) and industrial production, all for December.

Whether this turns out to be a bumpy week for mortgage rates will depend on what the Fed speakers and those economic reports actually say. But it might be worth strapping in, just in case.

Debt ceiling

The debt ceiling could also raise its ugly head this week: as early as Thursday, according to a warning from Treasury Secretary Janet Yellen last Friday. A failure to raise the debt ceiling is always spoken of in apocalyptic terms, not least because its consequences could prove apocalyptic.

Ultimately, the United States Treasury could default on its debt payments, most obviously, those made to Treasury bondholders. Those bonds are seen as the safest investments in the world and are used to secure many other debts internationally. So, were the U.S. government to default, that could trigger a global financial meltdown that might make 2008 look like Manet’s Déjeuner sur l'herbe (a tranquil, relaxed picnic).

Such a catastrophe would very likely bring much lower mortgage rates, at least in the end. But that might be little consolation if it’s also wiped out your job and investments.

Will the new U.S. Congress authorize the raising of the debt ceiling? Watch this space. And pray.

For more background, please read the latest weekend edition of this daily rates report.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Jan. 12 report put that same weekly average at 6.33%, down from the previous week’s 6.48%.

In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

What is a contingency in real estate?

The phrase “contingency” is a pretty common one in the real estate world.

Essentially, it’s a clause in a sales contract — a condition that must be met before the deal goes through. If that condition isn’t met by a certain deadline, you can back out of the transaction unscathed (i.e., without losing your deposit).

Not too long ago, real estate contingencies weren’t so common. Sellers had a lot of leverage. In

What is a contingency in real estate?

The phrase “contingency” is a pretty common one in the real estate world.

Essentially, it’s a clause in a sales contract — a condition that must be met before the deal goes through. If that condition isn’t met by a certain deadline, you can back out of the transaction unscathed (i.e., without losing your deposit).

Not too long ago, real estate contingencies weren’t so common. Sellers had a lot of leverage. In order to stand out from the pack, buyers had to waive many contingencies just to land a deal.

Now, the tables have turned. As mortgage expert Ivan Simental recently explained on The Mortgage Reports Podcast, “Now, it’s in more of a favor of the buyer.”

This is a good thing, Simental says, as it provides more protection for buyers and ensures they’re making a smart deal.

Are you considering buying a home in today’s market? Simental recommends including real estate contingencies in your offers — specifically these three.

Listen to Ivan on The Mortgage Reports Podcast!

1. Home inspection contingency

A home inspection contingency gives you a certain amount of time — typically 10 to 15 days — in which to have your home inspected for deficiencies. You’ll hire a third-party certified home inspector. They evaluate the property and give you a final home inspection report detailing any issues.

“This time period is when you get to see what is really wrong with the property,” Simental says. “What issues does the property have? Are there going to be any repairs needed?”

If repairs are necessary, you can negotiate for the seller to facilitate them before closing or, if they’d rather not, include closing credits so that you can pay for the repairs yourself after move-in.

2. Financing contingency

A financing real estate contingency, also known as a mortgage contingency, is a clause that allows you to cancel the home purchase contract if you’re unable to secure a mortgage within a specific timeframe.

If your mortgage doesn’t get approved or there’s another issue with your financing, you’re able to pull out of the deal without penalty and receive a refund of the earnest money you put down.

“Sometimes a lender makes a mistake, and your loan gets denied,” Simental says. “If there is no financing contingency, you lose your earnest money deposit, and you don’t get that back.”

3. Appraisal contingency

Another important real estate contingency is the appraisal contingency. It informs your lender whether the purchase price you pay is in line with the home’s fair market value. If the home’s appraised value comes in under what you’ve offered for it, you can pull out of the deal.

This is pretty critical because, without the appraisal contingency, you could be on the hook for quite a bit of cash.

For example, if your sales contract has you offering $500,000, but the home’s appraisal comes in at $450,000, your lender’s not going to give you that full $500,000. Instead, you’d need to make up the difference ($50,000) out of pocket (or back out and lose your earnest money).

“Luckily, right now, I’ve been seeing values coming in a little bit higher, because sellers are knocking the sales price down a little bit,” Simental says. “Still, the appraisal contingency is an important one because it protects you from overpaying.”

The Bottom Line

Whether you’re a first-time home buyer or a repeat one, navigating the purchase of a home can be intimidating. However, with the right real estate contingency clause in the contract, both you and the seller will stay protected.

Just remember that adding too many real estate contingencies in your contract could make your offer less appealing to a seller, especially if multiple bids are involved. If you’re in the market to buy a home, reach out to a local lender or real estate professional to begin your path to homeownership.

Today’s mortgage and refinance rates

Average mortgage rates fell by a worthwhile amount yesterday. They are now at their lowest level since last September.

Earlier this morning it was looking as if mortgage rates today might rise. However, as always, that could change as the hours pass.

Current mortgage and refinance rates

Should you lock a mortgage

Today’s mortgage and refinance rates

Average mortgage rates fell by a worthwhile amount yesterday. They are now at their lowest level since last September.

Earlier this morning it was looking as if mortgage rates today might rise. However, as always, that could change as the hours pass.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

I will review my personal rate lock recommendations (below) after we’ve had a chance to see how the Federal Reserve reacts to yesterday’s inflation report. Let’s hope there will be some green “float” ones next week.

And, for now, those recommendations remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Yesterday’s consumer price index (CPI) showed that prices actually dropped in December. It was the first time that had happened in more than two years.

That was terrific news. No wonder mortgage rates fell. Both markets and the Federal Reserve must have been delighted.

The Fed is likely to see the CPI as showing that its painful anti-inflation measures are beginning to work. However, markets look to me to be too optimistic about how the Fed will respond in practical terms. They seem to believe that the central bank will very quickly stop its rate hikes.

In reality, the Fed will be recalling a painful lesson it learned in the early 1980s. Back then, it fought inflation with massive rate increases, which caused an unusually harsh recession. Sure enough, prices fell. But the Fed let up too soon and inflation rose again, requiring a second recession.

I believe that the Fed is determined not to repeat that mistake. So, markets may not get the low interest rates they hope for as quickly as they wish. And, if they are disappointed in that way, mortgage rates might well rise sharply.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Jan. 12 report put that same weekly average at 6.33%, down from the previous week’s 6.48%.

In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

Today’s mortgage and refinance rates

Average mortgage rates fell again yesterday, though much more modestly than they did last Friday.

So far this morning, markets are signaling that mortgage rates today might move higher. But the momentum was not strong and could change later in the day.

Current mortgage and refinance rates

Should

Today’s mortgage and refinance rates

Average mortgage rates fell again yesterday, though much more modestly than they did last Friday.

So far this morning, markets are signaling that mortgage rates today might move higher. But the momentum was not strong and could change later in the day.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

Keep reading for my main reason for not yet changing my personal rate lock recommendations, which for now remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Regular readers will know that mortgage rates are largely determined by a type of bond called a mortgage-backed security (MBS). And that those rates often shadow the yield for 10-year Treasury notes.

The reason both those rates and those yields have been falling recently is that investors have suddenly grown enamored of all types of bonds. The extra demand has pushed up prices. But bond yields (and so mortgage rates) always move inversely to prices.

The reason I’m yet to change my rate lock recommendations (above) is that I’m still not convinced investors will keep buying bonds in the volumes they’ve been doing so far this year. They seem to be doing so because they’ve persuaded themselves that the Federal Reserve will stop hiking rates sooner than expected.

Yesterday, I quoted The Wall Street Journal’s doubts about how realistic that expectation is. And, also yesterday, CNN Business’s Before the Bell e-newsletter raised other doubts. Its headline read, “Bonds are back, but for how long?”

The article went on: “Now investors are betting that those rate increases are mostly over and that inflationary pressures are on a downswing. … The problem is that there’s no guarantee that interest rates will actually come down, and investors could find themselves blindsided if they don’t.”

If investors do find themselves blindsided, that could be very bad news indeed for mortgage rates.

And there’s plenty of concern among some pretty distinguished people. Last Friday, on Bloomberg TV, former Treasury Secretary Larry Summers predicted “tumult” for bonds through this year.

Of course, nobody knows for sure what will happen in the future to bonds or mortgage rates. But I see too much scope for trouble to urge anything other than caution.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Jan. 5 report put that same weekly average at 6.48%, up from the previous week’s 6.42%.

In November, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

The perks of being a first-time home buyer

First-time home buyers enjoy certain benefits that repeat buyers can’t always access.

Many down payment assistance programs and low-cost home loans are reserved for first-time buyers. You might have access to special tax breaks. And there are non-financial perks, too, like free online homeowner education courses.

If you want to buy a home but don’t know whether you can afford it, take a

The perks of being a first-time home buyer

First-time home buyers enjoy certain benefits that repeat buyers can’t always access.

Many down payment assistance programs and low-cost home loans are reserved for first-time buyers. You might have access to special tax breaks. And there are non-financial perks, too, like free online homeowner education courses.

If you want to buy a home but don’t know whether you can afford it, take a look at these first-time home buyer benefits. They might give you the boost you need to put homeownership within reach.

In this article (Skip to...)

The best first-time home buyer benefits in 2023

1. Low down payments

Being able to buy a house with little or no money down is one of the most important first-time home buyer benefits. It gets you on the housing ladder quicker and lets you put more of your savings toward other essentials, like closing costs and moving expenses.

Of course, low down payments aren’t restricted to first-time buyers. But they’re a huge help when you’re currently renting and can’t sell an existing home to help pay for your new one.

Nearly all first-time buyers can get a mortgage with a down payment of just 3% using a conventional loan or 3.5% using an FHA loan. Some can even buy with no down payment at all.

If you’re a veteran or still in the military, you can buy a house with $0 down using the VA loan program. And many home buyers in rural or semi-rural areas can get mortgages backed by the U.S. Department of Agriculture (USDA loans), which also require no down payment.

Talk to a mortgage lender about your options. You might be surprised how little you need saved to afford the home you want.

2. Down payment and closing cost assistance

First-time buyers often don’t realize they could get help with their down payment and upfront costs. But home buyer assistance programs are actually really common.

There are thousands of down payment assistance (DPA) programs across the country. And at least one will cover the place where you want to buy a home.

You might be offered a grant, a forgivable loan with no monthly payments, or a repayable loan with a low interest rate. Many programs help only those with low-to-average incomes and decent credit scores, but some are open to wider groups.

Each DPA program gets to set its own rules and eligibility criteria. So, we can’t tell you whether you’ll qualify or what you may be offered. But we can point you in the right direction to learn more; see down payment assistance programs in every state to get started.

3. Reduced PMI costs

Homeowners tend to hate their private mortgage insurance (PMI) premiums because this type of coverage protects the lender, not the borrower. Many home buyers end up paying for mortgage insurance because it’s typically required when you put less than 20% down.

But, if you’re a first-time buyer with modest income, you may be able to get a loan with reduced PMI premiums and lower monthly payments.

The HomeReady and Home Possible mortgages offer discounted PMI rates compared to a standard conventional loan — even if you put only 3% down. And you can stop paying PMI as soon your mortgage balance dips below 80% of your home’s value.

Veterans and service members can easily avoid PMI, too, since the VA loan program doesn’t charge it.

If you’ve heard horror stories and you’re hoping to avoid PMI at all costs, talk to a lender about these options. You might qualify for a lower-cost PMI loan or one with no mortgage insurance whatsoever.

4. Home buyer education

If you use a down payment assistance program or get your mortgage through the state government, you’ll likely have to take a mandatory home buyer education course. But these classes can be a great idea even when they’re not required by your mortgage lender.

Buying your first home is complicated. And most find it a bit scary. The more knowledge you acquire on the subject, the better equipped and the more confident you’ll become. You could also save money by learning how to shop for your mortgage rate, homeowners insurance, and other expenses.

Homeowner education courses are typically free or cheap. And many can be completed online in just a few hours. Your mortgage lender can fill you in on the details and point you toward the right class for your needs.

5. First-time home buyer tax breaks

Those who apply for a state-run DPA or mortgage program may also qualify for a mortgage credit certificate (MCC). These let you make deductions from your federal tax return of up to $2,000 annually for as long as the certificate is valid. And the savings apply even if you don’t itemize your deductions.

Don’t miss out if you’re offered one! Most first-time buyers need all the help they can get.

The Mortgage Reports is not a tax site. This information is for general guidance only. Consult with a tax professional about your specific situation.

6. Building home equity

The ability to build wealth through equity is one of the biggest benefits for any homeowner. But if you’re a first-time home buyer, this is a brand-new perk.

You’re already aware that when you rent, you never see a return on investment. Those monthly payments just line your landlord’s pockets. But when you own a home, part of each monthly mortgage payment adds to your own assets in the form of additional home equity.

Some first-time buyers waver between buying early with a low down payment — and likely paying PMI — or saving for 20% down. As you weigh the pros and cons, keep in mind that PMI is usually only a temporary cost. But the wealth you build as a homeowner is permanent, and should continue to grow year after year.

For many, it’s worth it to buy sooner rather than later and stop paying rent for good.

Who qualifies for first-time home buyer benefits?

You might think the meaning of “first-time home buyer” is obvious. Doesn’t it mean someone buying their own home for the first time?

Well, no. Not always. Almost every lender and public authority defines a “first-time buyer” as someone who hasn’t owned (or had an ownership interest in) a home over the previous three years. And some make exceptions for the newly divorced. That means you might qualify for first-time home buyer loans and grants even if you’ve owned property in the past.

Keep in mind that there are other requirements, too, depending on which home-buying programs you use.

If you want down payment assistance, you likely need to meet income limits and purchase price limits. These vary by program and region, though you’ll probably have to be at or below your area median income (AMI). Some programs require you to have an income below 80% of the AMI; others might permit 100% or even 120% or more.

Not sure what the AMI is where you wish to buy? Fannie Mae has an AMI lookup tool on its website that you can use to find out.

First-time home buyers also need to meet minimum credit score requirements (usually 580-620) and make the required down payment for their home loan program.

Again, these rules vary by loan type and lender. So reach out to a mortgage company when you’re ready to get started. Your loan officer will check which home loans you qualify for and help you choose the best option for your situation.

Where to find first-time home buyer benefits

If you’re looking for home buyer assistance, your first port of call should be your state’s housing finance agency (HFA).

Your local HFA may offer down payment assistance, closing cost assistance, first-time home buyer loan programs, and/or home buyer education. And it will connect you with a lender that can offer these programs.

You can also do a web search to find additional home buyer resources. Key in the name of your city or county plus “down payment assistance” or “home buyer education.” Also, check for nationwide home-buying programs and job-specific ones. Often, first responders, teachers, medical workers, and those in other highly valued occupations can get special help.

Some lenders also offer private down payment assistance. And Fannie Mae’s Community Seconds and Freddie Mac’s Affordable Seconds can provide especially attractive first-time home buyer benefits.

How to get started as a first-time home buyer

Studies consistently show that saving for a down payment is the top obstacle to homeownership for first-time buyers. But many don’t know about the low down payments that are open to them — nor about the DPA programs that can make home buying much more affordable.

But you do. So get started by choosing the type of mortgage that suits you best. And research local DPA programs that might be open to you. Who knows? You could be moving into your own home sooner than you dreamed possible.

Global warming’s toll on housing

If it feels like natural disasters are becoming more extreme and frequent, it’s because they are.

Climate change has raised the earth’s average temperature faster than at any point in history, causing intensified weather events and subsequent property destruction. As the elements continue to escalate, they will alter how and where we buy and build houses.

Accounting for global warming when making a home-buying

Global warming’s toll on housing

If it feels like natural disasters are becoming more extreme and frequent, it’s because they are.

Climate change has raised the earth’s average temperature faster than at any point in history, causing intensified weather events and subsequent property destruction. As the elements continue to escalate, they will alter how and where we buy and build houses.

Accounting for global warming when making a home-buying decision isn’t limited to the coasts, either — climate change affects people everywhere, just in different ways.

So, how can you factor in climate risk when buying a new home? Here are some expert tips to help borrowers assess the potential risks and mitigate damages.

In this article (Skip to...)

Severe weather events lead to serious housing risks

Catastrophic weather events are occurring more often, leading to big costs and insurance premiums for many homeowners.

Billion-dollar natural disasters multiplied over the past four decades, according to the National Oceanic and Atmospheric Administration (NOAA). They more than quadrupled from the 1980s to the 2010s, and surged even more in the 2020s.

No. of billion-dollar natural disasters per year (avg):

“It’s only going to continue to increase. Unfortunately, we as humans are not doing enough collectively to reduce our carbon footprint and to make the situations less severe,” said Danetha Doe, columnist at OZY Media and former economist at Clever Real Estate.

Further, the 13 largest natural disasters in 2021 caused $56.92 billion in estimated damages to about 14.57 million U.S. residences, according to CoreLogic. That equates to nearly 10% of the country’s homes. The chart below breaks down the impacts of those weather events.

According to a survey by Clever Real Estate, 87% of Americans said they’re concerned about climate change. Despite this, 63% said they’d still be open to buying a home in a high-risk area for natural disasters.

If you find yourself in the second camp, it’s worth taking the time to think about potential climate risks and how you can protect yourself before you buy.

How climate change impacts home buyers

Owning property in an at-risk area for severe weather means you could spend a lot more money as a homeowner — and not just when it comes to repairs.

Insurance companies charge higher rates in these places — and some won’t cover them at all — which leads to higher mortgage payments for borrowers. Of course, a larger monthly payment means a smaller home-buying budget and less money to spend elsewhere.

Plus, while having the proper homeowners insurance policy is necessary, making repairs can still be expensive. And reimbursement from your provider could be slow following major disasters.

If you have an older home and disaster strikes, you might have to pay extra to bring it up to today’s building codes. And if an event leaves your house uninhabitable, you could potentially need to relocate or completely rebuild afterward.

No one can completely avoid these risks. But you should think about the high costs of insurance and repairs ahead of time, as these can impact both your home-buying budget and your overall financial health. In other words, don’t let yourself be caught off guard if the worst happens.

What to consider when choosing a house

Natural disasters can throw entire communities into disarray, pushing people into temporary housing, forcing permanent relocations and depreciating home values — especially in areas without the infrastructure to withstand them.

Disasters can also put borrowers in a position of mortgage default or leave them unable to afford reconstruction.

For example, Hurricane Ida devastated Houma, La., in August 2021. The aftermath of the category 4 storm caused mortgage delinquency rates to jump from 7.4% to 13.3% month-over-month, according to CoreLogic.

When making one of the biggest financial decisions of your life, it’s important to know which potential dangers your property faces.

Hurricanes

Due to their enhanced strength and the housing-dense coastlines they typically batter, hurricanes pose a threat to many borrowers. In addition to covering some of the most desired and expensive real estate in the country, coastal counties in the contiguous U.S. account for nearly 40% of the population but less than 10% of the land, according to the NOAA.

CoreLogic’s 2022 Hurricane Report revealed that 31 million homes face the risk of wind damage and 7.5 million face surge damage — the two main loss areas from these storms.

Hurricane season normally spans June through November, but that definition may be antiquated; 2021 was the seventh straight year where a hurricane hit before June and had the third-highest annual tropical storm activity on record. Hurricanes build strength over warm ocean temperatures. As the seas keep getting hotter, it will likely lead to more of these storms at increased severity.

With Florida being on the hurricane vanguard, building codes could soon shift and insurance costs are jumping, according to Whitney Hall, branch manager for First Option Mortgage.

“There’s been talk that if homes built before 1981 get more than 50% destroyed, they’ll either need to be brought up to code or torn down. People just don’t have tens of thousands of dollars to bring their house up to code or raise it above the floodplain,” Hall said.

In September 2021, Hurricane Ian destroyed Hall’s south Florida home and the majority of its surrounding community. He said he paid about $15,000 out-of-pocket for damages and was still waiting for insurance reimbursement 45 days later.

Hall also noted that since Hurricane Irma in 2017, insurance prices doubled in most areas, which can have a big impact on borrowers’ monthly mortgage payments.

Flooding

While strongly associated with hurricane aftermath, flooding is a separate entity and doesn’t only happen because of rising sea levels along the coasts. It can occur near lakes, rivers, and even from heavy rainfall.

For example, about 26% of the 1.4 million single-family homes in Cook County, Illinois — which includes Chicago — are at moderate-to-extreme risk of flash flooding, according to CoreLogic. The combined estimated reconstruction costs of these residences would total $120.8 billion.

Perhaps because flooding isn’t exclusive to a particular region, borrowers don’t always think about it before purchasing property. Only 23% of home buyers take flooding risk into consideration when relocating, according to Clever.

Hall implores house hunters — especially those searching in flood-prone areas — to put more weight behind it before making a decision.

“We’ve talked about rising waters for so long that it’s an out-of-sight, out-of-mind issue for people. Every time we have a major storm, we see things slow down in our market until complacency sets back in. The insurance companies are getting hammered so hard with claims, that a person’s buying power is substantially reduced because of the amount of insurance needed on some houses,” Hall said.

Wildfires

As global temperatures rise and desertification expands, wildfire risk grows and the damage becomes more extreme.

Between 1983 and 1992, wildfires consumed an average of 2.7 million acres per year. By contrast, the annual average from 2012 to 2021 was 6.8 million acres per year, according to CoreLogic. The annual total surpassed 10 million acres in 2015, 2017, and 2020.

Wildfires, and the droughts that cause them, are most common in the Western states from late spring to early fall. As average temperatures have increased over time, water levels have declined. This has increased the length and breadth of wildfire season.

According to CoreLogic, the top 10 states facing wildfire danger have a total of nearly 3.5 million single-family homes facing risk.

Because of the increased danger from wildfires, insurance premiums (and the cost for homeowners) have risen as well. In California, the combined written premium totals for dwelling fire and homeowners insurance jumped 27% from $8.7 billion in 2017 to $11.1 billion in 2020, according to the California Department of Insurance.

According to the Federal Reserve Bank of Chicago, some insurers have already stopped covering parts of California because they are too risky for wildfires. Since 2018, removed wildfire insurance coverage increased by 31%.

Expert tips to mitigate climate change risk as a home buyer

Huge work needs to be done in order to slow and hopefully even reverse the effects of climate change. In the meantime, homeowners and buyers have plenty of things they can do to their properties or look for in listings to reduce the risk of potential damages.

Assess climate change risks before buying

When it comes to assessing the perils of global warming and natural disasters on a house for sale, knowledge is power.

Florida-based Remax associate Jennifer White strongly suggests home buyers do research before bidding on any for-sale properties. “I always recommend that buyers go to the FEMA website to gather their own information on the potential climate impacts for their home, like whether it’s located in a flood zone. Also, contact your insurance provider to determine what potential damage is covered under your policy and what coverage is necessary for your area,” White said.

White also tells borrowers to pour over the seller’s property disclosure — where they’re required by law to detail any and all elemental damage their house incurred — as well as inspect the grounds and foundation for cracks, sloping, and mold. While sometimes costly, she urges to pay for professional inspections.

“It’s worth the price to have peace of mind to truly understand what you are purchasing, and how it has and will continue to withstand climate-related events,” White said.

Do preventative maintenance

For places impacted by tropical storms, putting hurricane shutters on windows and having sandbags to block water from entering the house are proactive steps to take. You should also ensure all electronics stay at least a foot above the floor since most non-extreme flooding will be below that mark, Doe stated.

In areas susceptible to wildfires, California-based Redfin principal real estate agent Mike Cendejas suggests having personal water reserves for quick access and cutting back plants at least five feet from your home. “Whether it’s eliminating trees, keeping debris away from the property, or keeping it clean of weeds,” he said.

Cendejas also talked about installing specialized rooftop sprinkler systems and/or gutter guards to prevent build-up of materials that could catch fire more easily.

Take steps to avoid losing your assets

Insurance is paramount for homes at higher risk of climate damage and destruction. And — much like shopping around for a mortgage — getting the right type of insurance at a better price requires some leg work.

“Once they find a property they like, I recommend talking to two or three insurance agents to get estimates and then decide if they want to move ahead,” Cendejas said.

If you do find yourself in the unfortunate situation of filing an insurance claim, Doe advises taking videos all around your house for proof of your possessions and their approximate values. She also recommends having a go-bag packed in case you ever need to evacuate.

Consider green upgrades to your home

At the individual level, Doe says you can reduce your carbon footprint and “not be part of the clear and present danger of climate change” by adding solar panels, improving insulation, putting out rain-collecting barrels, and installing multi-paned windows.

If you want these upgrades for your property, you can often finance them through special home loan programs that can make it more affordable. Energy efficient mortgages (EEMs) focus on environmentally friendly homes and have their own rules and processes. They also typically have lower interest rates than the market average, so it could pay to make your house greener.

Advice for borrowers

Not everyone can just pick up and move if they live in high-risk climate areas. And many simply won’t want to — just like some borrowers won’t be deterred from relocating to desirable communities despite the risk.

But wherever you live, you can take measures to mitigate or possibly avoid damages from natural disasters.

You should keep in mind that general homeowners insurance usually won’t protect you from things like wildfires or floods, and you’ll probably need to purchase additional coverage depending on what risks your property faces.

If you’re ready to get a mortgage and become a homeowner, reach out to local loan officers today.

Are today’s HELOC rates worth it?

Home equity line of credit (HELOC) rates tend to be higher than standard mortgage rates. So why are more homeowners choosing HELOCs over cash-out refinances?

One reason is that HELOCs let you cash out only the amount of equity you need. You don’t have to borrow — and pay interest on — the entire value of your home.

Plus, a HELOC is a credit line you can draw on as needed. And, unlike a cash-out refi, HELOCs

Are today’s HELOC rates worth it?

Home equity line of credit (HELOC) rates tend to be higher than standard mortgage rates. So why are more homeowners choosing HELOCs over cash-out refinances?

One reason is that HELOCs let you cash out only the amount of equity you need. You don’t have to borrow — and pay interest on — the entire value of your home.

Plus, a HELOC is a credit line you can draw on as needed. And, unlike a cash-out refi, HELOCs are relatively cheap to set up. So a home equity line often costs less than a cash-out mortgage when all’s said and done.

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What are current HELOC rates?

Much like mortgage rates, HELOC rates have been volatile recently.

At the end of 2022, Nasdaq reported the average interest rate for a 10-year HELOC was 5.95%. That was down from a 52-week high of 6.62%. Average rates were as low as 3.96% earlier in the year.

Meanwhile, 30-year fixed mortgage rates ranged from 3.11% to 7.08% in 2022, with an average rate of 6.27% at the end of the year.

Sources: Nasdaq (HELOC rates), Freddie Mac (30-year fixed mortgage rates)

None of this is surprising. As the Fed tried to cool inflation, interest rates soared during 2022, rebounding from the historic lows of 2021.

A cash-out refinance or a home equity loan can usually offer lower rates than a HELOC. But refinances come with higher closing costs — and they force you to reset the rate on your entire mortgage balance.

With a HELOC, you’re paying interest only on what you charge to the credit line from month to month.

Is a HELOC a good idea right now?

Almost all HELOCs come with variable interest rates, and many homeowners try to avoid variable rates because of their uncertainty. Borrowers fear they couldn’t afford the loan if its rate climbed too high.

But what seems like a liability in normal times can be an advantage at other times. When rates are high, for example, a HELOC’s variable rate could be more likely to decrease as the years pass.

If rates were to fall in 2023 or 2024 — compared to their late-2022 levels — your HELOC’s rate would fall, too. That’s because HELOC rates are tied to the federal funds rate and the prime rate.

Meanwhile, a cash-out refi usually has a fixed interest rate. This would remain in place for the life of the loan, up to three decades, even if market rates fell.

Of course, it’s important to remember rates could also increase even more in the coming years. That would lead to a more expensive HELOC rate and payment — so these loans do come with additional risk.

Where will HELOC rates go from here?

The Federal Reserve increased interest rates steadily in 2022, and mortgage rates followed this upward trend. What will happen to rates in 2023 and beyond?

No one knows for sure, but many economists anticipate the Fed will start easing up on its campaign against inflation. For example, the Mortgage Bankers Association’s projections show the Federal Funds Rate remaining steady in 2023 but starting to drop in early 2024.

If the Fed does start lowering its rates, HELOC rates would likely go down, too.

But that’s just a projection and not a certainty. A lot can change those projections in a dynamic economy.

Other HELOC advantages

Annual percentage rates aren’t the only thing to consider when you choose a HELOC. The structure of this loan can offer serious benefits for homeowners.

Since you borrow only what you need, the loan balance on a HELOC is almost always lower than the balance on a cash-out refi. That means lower monthly payments. And your existing mortgage payment, rate, and term won’t be affected by the new HELOC.

In addition, HELOC payments are based on the amount of credit in use. In that sense they resemble a credit card: You don’t pay interest on the card’s spending limit, just on your monthly balance. HELOCs work the same way, except they have significantly lower interest rates than credit cards.

By contrast, a cash-out refinance combines all your mortgage debt into one loan. The refi replaces your primary mortgage with a new, larger loan that comes with a new rate, term, and payment amount.

How HELOC rates and payments are structured

HELOCs are structured in two parts. They have a “draw period” and a “repayment period.”

During the initial draw period, you can borrow from and repay your HELOC as often as you want up to your credit limit. And you pay interest only on the funds you’ve drawn. So if you opened a $50,000 HELOC but borrowed only $5,000, you’d pay interest only on the $5,000 balance.

The length of the HELOC draw period can vary. Common options include five, 10, 15, or 20 years. When the draw period ends, the repayment period begins. And that often lasts for 10 to 20 years.

During the repayment period, your HELOC effectively becomes an installment loan. At that point, you can no longer draw money from the credit line. And your monthly payments are fully “amortized,” meaning your loan will be totally paid off at the end of the repayment period.

Factors that impact your HELOC rate

HELOC rates are tied to the prime rate, but that doesn’t mean all HELOC rates are the same. Every borrower will be offered a unique HELOC rate based on their credit score and a few other factors.

On top of this, every lender gets to set its own rates. So one lender could offer you a much better deal than another. Just like when you got your original home loan, you should get quotes from at least three HELOC companies to find the lowest interest rate you can.

HELOC rates vs. mortgage rates

Typically, fixed mortgage rates are lower than HELOC rates. That’s because HELOCs are considered riskier for mortgage lenders.

Since a HELOC is a “second mortgage” or in the “second lien position,” the HELOC lender might be paid less, or not at all, after a foreclosure. Higher rates compensate lenders for taking that risk.

But those relationships can change during unusual interest rate markets. For instance, in mid-2022, there were 10-year HELOC rates close to — or even a little lower than — 30-year fixed mortgage rates.

That is partly because 10-year HELOCs have variable APRs and shorter loan terms. A new HELOC rate isn’t fixed for 30 years. That relieves lenders of much of the risk if rates continue to rise.

Is a HELOC or a mortgage cheaper?

Despite its tendency to charge higher rates, a HELOC can be a cheaper loan option for some homeowners.

First, HELOCs tend to have lower closing costs than a cash-out refinance. Many lenders offer low- or no-fee HELOCs, while a cash-out refi typically costs 2%-5% of your total loan amount.

Keep in mind, too, that a HELOC has a smaller interest-bearing balance. Paying a higher interest rate on a smaller loan amount might be cheaper than a lower interest rate on a bigger loan.

What does this mean for you?

Here’s the question that matters most: Is a HELOC or a mortgage cheaper for you? Costs for both loans depend a lot on your credit score, debt-to-income ratio, and the amount of equity you want to borrow.

The answer also depends on what kind of loan you have now.

For example, if you locked in a historically low mortgage rate in 2020, you’d lose that rate if you got a cash-out refi. By adding a HELOC instead of refinancing your entire mortgage balance, you could keep the current rate on your primary mortgage.

Of course, if you can get a lower rate on your entire mortgage balance, a cash-back refi might pay off. It could generate equity for home improvements or other needs while also lowering the interest rate on your entire mortgage debt.

There is no one-size-fits-all answer

Mortgage and HELOC rates will also vary by lender. Some offer low rates and high closing costs while others have higher rates and lower closing costs.

There are no shortcuts here. Your best bet is to check in with a mortgage lender and get rate quotes on both a HELOC and a cash-out refinance. Your loan officer will help you decide which loan type makes the most sense in your financial situation.

As you shop around, be sure to compare fees as well as rates. Some lenders charge ongoing annual fees. Others might offer a slight rate discount if you set up automatic payments from a checking account.

How you plan to use the cash matters, too

You can use the money from a HELOC, home equity loan, or cash-out refi any way you want, but how you plan to use the money might influence your loan choice.

HELOCs tend to work best for homeowners who have ongoing needs — like home renovation projects that happen in stages.

For example, let’s say you’ll be getting a new roof and a new HVAC system this year but won’t be starting on the kitchen and bathrooms for a couple more years. In this case, you could draw HELOC funds to pay for the roof and HVAC and then pay off the HELOC’s balance. Then you could use the same equity again for the kitchen and bathrooms — without having to apply for another loan and pay closing costs again.

On the other hand, if you were using the funds for a large, one-time purchase or for debt consolidation, it might make more sense to get a home equity loan that generates a lump sum and has fixed monthly payments.

Can I get a fixed-rate HELOC?

If you’re looking for a true fixed-rate loan, consider a home equity loan. Like HELOCs, these are second mortgages and won’t impact your existing home loan. Unlike HELOCs, though, home equity loans come with fixed interest rates and regular monthly installment payments.

Lenders may also offer “fixed-rate HELOCs,” but these aren’t as simple as they sound.

Some lenders offer hybrid fixed-rate HELOCs, letting you fix the rate on an outstanding balance partway through the loan. This, effectively, converts your HELOC into a home equity loan at some point during its term.

Other lenders may allow you to fix the rate on one or more withdrawals made from your credit line. And some may offer lower introductory rates that increase after the first year or two.

There’s a lot of variety in the HELOC market. So shop around, compare options, and read the loan terms carefully before you sign on. Make sure you understand exactly how your HELOC rate and payments will work so nothing takes you by surprise.

How to find your best HELOC rate

Just like mortgage shopping, the only way to find your lowest HELOC rate is to get quotes from multiple lenders and compare their offers. Look for not only the lowest rate, but the best combination of interest rate and upfront fees.

We’d recommend getting HELOC quotes from at least three to five lenders, including your existing bank, your existing mortgage lender, and a variety of other sources like online lenders and credit unions. You can also check out lenders recommended by family, friends, and colleagues.

If you want the best possible HELOC rate, it also helps to do a financial checkup before you apply. Remember that lenders give the lowest rates to borrowers with good credit and low debt levels.

In particular, try to:

You may not have the time or ability to do any or all of those. But, if you can, you might see worthwhile savings on the HELOC rates and closing costs you’re offered.

HELOC rates FAQ

Your next steps

HELOC rates are generally higher than mortgage rates. But you pay interest only on what you borrow — meaning HELOC payments are often much lower than mortgage payments.

There are pros and cons to both mortgage types, so consider your loan options carefully.

Check in with a lender to learn what HELOC rate you qualify for today.

Today’s mortgage and refinance rates

Average mortgage rates edged lower yesterday. That was welcome. But it was only the second fall in the last eight working days.

Unfortunately, markets this morning are suggesting that mortgage rates today might rise. But that could change as the hours pass.

Bond markets will be closed next Monday for the New Year holiday. So we'll be back next Tuesday. However, you can still read the

Today’s mortgage and refinance rates

Average mortgage rates edged lower yesterday. That was welcome. But it was only the second fall in the last eight working days.

Unfortunately, markets this morning are suggesting that mortgage rates today might rise. But that could change as the hours pass.

Bond markets will be closed next Monday for the New Year holiday. So we'll be back next Tuesday. However, you can still read the weekend edition on Saturday morning, which delivers a deeper dive into mortgage rates' movements.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

The path forward for mortgage rates may begin to become clearer next week. But, for now, we remain in the dark. (See below for why.)

So, as I’m a cautious person, my personal rate lock recommendations for now remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Will today be the last day on which I have to repeat that the holiday season obscures the reasons for mortgage rates rising and falling? Maybe not. It will probably take a few days for currently absent investors and traders to settle back into work mode following their extended festive break.

Still, next week brings some more important economic information than this one did. And that includes the minutes of the last meeting of the Federal Reserve’s monetary policy committee and the jobs report for November.

So, at least I can change the record then. And, with luck, we can get a firmer grip on market sentiment.

However, don’t expect the current unpredictability surrounding mortgage rates to suddenly evaporate. Next year is full of unknowns, including what the Fed will do and whether there’s going to be a recession.

For more background, please read the latest weekend edition of this report.

Recent trends — updated today

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Dec. 29 report put that same weekly average at 6.42%, up from the previous week’s 6.27%.

In November, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

What credit score do I need for an FHA loan?

To take advantage of the FHA’s lowest down payment (just 3.5%) the Federal Housing Administration requires a credit score of least 580.

If your credit score is lower — between 500 and 579 — you may still be eligible for an FHA loan. But you’ll need to make a higher down payment of 10% or more.

Ready to find out if you qualify? Here’s a more in-depth look at FHA’s credit requirements.

What credit score do I need for an FHA loan?

To take advantage of the FHA’s lowest down payment (just 3.5%) the Federal Housing Administration requires a credit score of least 580.

If your credit score is lower — between 500 and 579 — you may still be eligible for an FHA loan. But you’ll need to make a higher down payment of 10% or more.

Ready to find out if you qualify? Here’s a more in-depth look at FHA’s credit requirements.

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FHA loan credit score requirements

The FHA loan allows for lower credit score requirements than most other mortgage programs. In fact, the Federal Housing Administration states that mortgage borrowers cannot be rejected based on a “lack of credit history, or the borrower’s decision to not use credit”.

In other words, you might qualify for an FHA loan if you have a low credit score or even no credit score at all. (But keep in mind that low scores due to poor credit management, like missed or late debt payments, can still disqualify you.)

FHA loans have two basic tiers when it comes to credit score requirements:

However, mortgage lenders have the flexibility to decide which loans to offer and to set their own guidelines. This includes minimum credit scores.

The practice of setting stricter lending guidelines is commonly known as having “lender overlays.” Overlays are the reason you’ll see different credit score requirements for the same home loan program, depending on the lender.

While some lenders offer FHA loans with scores as low as 500, most require a “safer” credit score of 580 or higher. Aside from obtaining a Non-QM loan, if your credit scores are lower than 620, you may not have many other options for a home loan.

To qualify for an FHA loan with a 3.5% down payment, you’ll need a minimum FICO credit score of 580.

FHA loans with a 500 credit score

Although the FHA allows for credit scores as low as 500, don’t be surprised if you have a tough time finding a lender. Most lenders want to see a minimum score of 580-600 for an FHA loan. Some lenders even require scores starting at 620 or 640.

If you’ve found a lender offering FHA loans with credit scores between 500 and 579, be prepared for a few other caveats as well.

In addition to tougher underwriting standards, prepare for a higher interest rate to offset the lender’s risk. In general, the lower your credit score, the higher your rate.

Lenders may even charge a higher interest rate along with discount points for that higher rate. So be sure to get multiple quotes and compare them side by side. Look for the lender that’s truly offering the “best” deal overall — meaning the most affordable combination of rates and upfront fees.

FHA credit score requirements for refinancing

According to FHA guidelines, mortgage applicants must have a minimum credit score of 500 to qualify for an FHA refinance. Much like home buying transactions, however, you may have a difficult time finding a lender to approve you with a score below 580.

You might think you can side-step credit score requirements with an FHA Streamline Refinance loan. According to FHA Streamline rules, the lender isn’t required to check your credit, verify your income, or order a home appraisal before approving you for a refi.

In reality, however, many lenders will check the borrower’s credit anyway. As always, lenders want to know they’re making a safe bet when they lend money. Your credit score is a big part of that decision-making process.

For an FHA cash-out refinance loan, you’ll need to have more than 20% equity in your home and at least a 580 FICO score. Most FHA lenders set their own limits higher to include a minimum score of 600-620, though. This is because cash-out refinancing is generally considered to be higher risk than non-cash-out refinance loans, or even a home purchase.

FHA vs. conventional loan credit scores

Conventional loans typically require a credit score of 620 or higher. If your credit score is lower than 620, an FHA loan may be your only option.

The main downside here is that all FHA loans require mortgage insurance. FHA mortgage insurance is known as “MIP,” or “mortgage insurance premium.” If your down payment is less than 20%, conventional loans also require mortgage insurance known as “private mortgage insurance,” or “PMI.”

FHA mortgage insurance premiums vary based on your down payment. Even then, the difference in your premium is negligible; the annual MIP rate drops from 0.85% to 0.80% when you make a down payment of 5% or more.

With conventional loans, however, lower credit scores not only mean higher interest rates but also significantly higher mortgage insurance premiums. That means mortgage insurance is often cheaper on an FHA loan than a conventional loan for buyers with low credit.

As an example, let’s say you have a 620 credit score and you’re putting 5% down on a home using an FHA loan. To have the equivalent insurance premium with a conventional loan and just 5% down, you would need a 700 credit score.

Don’t forget that with both FHA and conventional loans, a lower credit score means higher interest rates. However, a higher interest rate isn’t the end of the world. If you work on your credit, you may be able to refinance your loan for a lower rate soon.

Additional FHA loan requirements

Along with minimum credit score standards, FHA loans have additional requirements for borrowers. Fortunately, these requirements are less stringent as compared to conventional loans.

To be eligible for an FHA loan, you’ll typically need to:

Keep in mind that lender overlays may mean additional minimum requirements when applying for FHA financing.

Before you finalize your loan, you should get preapproved with a few different FHA lenders to learn more about their guidelines, interest rates, and upfront fees. Then choose the lender that can best meet your needs and price point.

Your next steps

If your credit scores are low, or if you don’t have a large down payment, don’t lose hope. Even with lower scores, an FHA loan could be the solution for getting into your dream home.

The best way to know if an FHA loan is right for you is by speaking to a mortgage lender about your options. Check your eligibility today.

Today’s mortgage and refinance rates

Average mortgage rates rose again yesterday. They’re appreciably higher than they were at the start of December. But they’re lower than they were one month ago.

Still, things may improve a little. Because it was looking this morning as if mortgage rates today might fall modestly. However, that relies on the early momentum being sustained and there are already signs that it’s weak.

Today’s mortgage and refinance rates

Average mortgage rates rose again yesterday. They’re appreciably higher than they were at the start of December. But they’re lower than they were one month ago.

Still, things may improve a little. Because it was looking this morning as if mortgage rates today might fall modestly. However, that relies on the early momentum being sustained and there are already signs that it’s weak.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

We’ve seen a run of bad days for mortgage rates with only one fall since Dec. 16. This may or may not be significant for where they’re heading next.

But, as I’m a cautious person, my personal rate lock recommendations for now remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

I’d like to claim that recent rises in mortgage rates are fulfilling my predictions. Regular readers will remember that I was highly skeptical about positive market reactions to Federal Reserve events on Dec. 14. I thought investors were hearing what they wanted to hear rather than what the Fed was actually saying. And I expected those rates to rise as reality dawned.

That was CNBC’s take yesterday on rises in the yields on 10-year U.S. Treasury notes, to which mortgage rates are closely related. It said: “Concerns about [Fed] rate hikes dragging the U.S. economy into a recession have spread among investors in recent weeks as Wall Street awaits a new trading year.”

But I can’t claim — at least yet — that I and many others were right and markets were wrong. We’re in that weird time of year when desks at financial centers around the world, including Wall Street, are emptier than usual. And, often, those skeleton staffs left behind comprise less-experienced managers and traders as their bosses enjoy an extended festive break.

This creates added volatility in markets most holiday seasons. And we’ll have to wait until things get back to normal next week to see whether recent rises have been down to that volatility or my fears.

One thing’s for sure: My hopes yesterday that this week would be a relatively quiet one have gotten off to a bad start.

For more background, please read the latest weekend edition of this report.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Dec. 22 report put that same weekly average at 6.27%, down from the previous week’s 6.31%.

Recently, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

Today’s mortgage and refinance rates

Average mortgage rates moved higher last Friday. Indeed, they rose across the whole of that week.

So far this morning, market movements are suggesting mortgage rates today might rise. But, as always, that could change later in the day.

Current mortgage and refinance rates

Should you lock a mortgage

Today’s mortgage and refinance rates

Average mortgage rates moved higher last Friday. Indeed, they rose across the whole of that week.

So far this morning, market movements are suggesting mortgage rates today might rise. But, as always, that could change later in the day.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

We’re in that strange twilight world that happens over most holiday seasons. And mortgage rates may be more volatile and unpredictable than normal.

So, as I’m a cautious person, my personal rate lock recommendations for now remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Many of the investors and traders who largely determine mortgage rates will be taking extended holiday breaks this week. And the fewer — and often less experienced — ones left behind can sometimes create volatility and unpredictability. Because it takes only a few of them to go off-piste for those rates to do unexpected things.

So, we should probably wait for the first full week in January, when staffing levels should be back to normal, before trying to draw any conclusions about what’s happening to mortgage rates.

There are very few economic reports on this week’s calendar. And those that do appear rarely move mortgage rates far. So, the main risks over the next few days are highly important unexpected events — and those remaining investors and traders straying from the nursery slopes.

So, there’s every reason to hope for a quiet week. Fingers crossed.

For more background, please read the latest weekend edition of this report.

Recent trends

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Dec. 22 report put that same weekly average at 6.27%, down from the previous week’s 6.31%.

Recently, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.

Today’s mortgage and refinance rates

Average mortgage rates nudged modestly higher yesterday. But we should probably count ourselves lucky they didn’t climb further.

Once again, mortgage rates today look likely to rise. Let’s hope that changes as the hours pass.

Bond markets will be closed next Monday, meaning mortgage rates shouldn't move that day. So, we'll be back on Tuesday. But you can read our weekend edition

Today’s mortgage and refinance rates

Average mortgage rates nudged modestly higher yesterday. But we should probably count ourselves lucky they didn’t climb further.

Once again, mortgage rates today look likely to rise. Let’s hope that changes as the hours pass.

Bond markets will be closed next Monday, meaning mortgage rates shouldn't move that day. So, we'll be back on Tuesday. But you can read our weekend edition tomorrow morning, as usual. Have a very happy holiday. And please stay safe if you're traveling.

Current mortgage and refinance rates

Should you lock a mortgage rate today?

Don't lock on a day when mortgage rates look set to fall. My recommendations (below) are intended to give longer-term suggestions about the overall direction of those rates. So, they don’t change daily to reflect fleeting sentiments in volatile markets.

Nothing’s changed since yesterday. Mortgage rates remain unpredictable and may be subject to heightened volatility.

So, as I’m a cautious person, my personal rate lock recommendations for now remain:

>Related: 7 Tips to get the best refinance rate

Market data affecting today’s mortgage rates

Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:

*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.

So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to rise. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.

Important notes on today’s mortgage rates

Here are some things you need to know:

A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Why did I start out by saying we should count ourselves lucky that mortgage rates didn’t move higher yesterday? Because some economic news landed that day that often would have made those rates jump further.

Revised figures for gross domestic product (GDP) during the third quarter showed the economy grew 3.2% instead of the 2.9% forecast by economists and analysts. And that’s a lot. Meanwhile, weekly new claims for unemployment benefits were also a bit better than expected.

This is a time when the Federal Reserve’s interest rate hikes should be slowing the economy. But that’s simply not happening in the way most expected. Even consumer spending is holding up well.

So, what will the Fed do about that? Well, it’s very likely to hike rates even higher and for even longer than markets would like. And that’s bad for mortgage rates.

Today’s inflation report

This morning brought the Fed’s favorite measure of inflation, the personal consumption expenditures (PCE) price index. And that was a mixed bag.

The main price index rose only 0.1% in November, down from 0.4% in October. And most other figures were similarly good. However, the year-on-year “core” price index (after volatile food and energy prices have been stripped out) was a little higher than economists had expected.

Were this morning’s rising mortgage rates a result of that one figure? Or is it a result of disappointment about the too-resilient economy continuing from yesterday? I’m not sure yet.

For more background, please read the latest weekend edition of this report.

Recent trends — updated today

According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.

Freddie’s Dec. 22 report put that same weekly average at 6.27%, down from the previous week’s 6.31%.

Recently, Freddie stopped including discount points in its forecasts. It has also moved later in the day the time at which it publishes its Thursday reports. And, from now on, we'll be updating this section on Fridays.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their rate forecasts for the current quarter (Q4/22) and the first three quarters of next year (Q1/23, Q2/23 and Q3/24).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s and the MBA’s forecasts appeared on Dec. 19 and Freddie’s on Oct. 21. Freddie now publishes its forecasts quarterly and its figures can quickly become stale.

Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.

Find your lowest rate today

You should comparison shop widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

“Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.”

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.