Compare rates by looking at: the quoted interest rate, the APR (which includes fees), and the total closing costs. Get 2-3 Loan Estimates from different lenders within the same week.
Use online tools like Bankrate or NerdWallet for general benchmarks, but rely on actual lender quotes for your specific situation. Rates vary by credit score, down payment, and loan type.
What to Compare: Rate, APR, and Fees
When comparing mortgage offers, look at these three numbers side by side:
- Interest rate: The base rate you pay on your loan amount. Lower is better, but it is only part of the picture.
- APR (Annual Percentage Rate): The interest rate plus lender fees, mortgage insurance, and certain closing costs rolled into a single number. This is the true cost of the loan.
- Closing costs: The total fees you pay at closing, including origination, appraisal, title, and third-party fees. Compare the bottom line.
Getting Multiple Quotes: 3-5 Lenders
The Consumer Financial Protection Bureau recommends getting quotes from at least three lenders. Here is why: each lender has different overhead, risk tolerance, and profit margins. The same loan can cost $500 or $5,000 more depending on who you choose. Gather all quotes within the same week to ensure you are comparing the same market conditions.
Online Tools vs Real Quotes
Online rate aggregators (Bankrate, NerdWallet, LendingTree) are useful for general benchmarks but not exact quotes. Your actual rate depends on your specific credit profile, loan amount, down payment, and property type. Always get a personalized Loan Estimate rather than relying on generic online rate tables.
Rate Comparison Table by Credit Score
| Credit Score Range | Typical Rate Impact |
|---|---|
| 760+ | Best available rate (lowest) |
| 700-759 | 0.25%-0.50% higher |
| 660-699 | 0.50%-1.00% higher |
| 620-659 | 1.00%-2.00% higher |
| Below 620 | May not qualify for conventional loans |
How Loan Type Affects Rate
Your loan type significantly impacts the rate you receive. Conventional loans typically have the best rates for strong borrowers. FHA loans have competitive rates but require mortgage insurance. VA loans often have the lowest rates available. Jumbo loans (above conforming limits) usually carry higher rates. Adjustable-rate mortgages (ARMs) start lower than fixed rates but carry future risk.
Timing Your Comparison
Mortgage rates change daily based on economic conditions, Fed policy, and market demand. When you are serious about buying, request all quotes within a 48-hour window to lock comparable rates. Many lenders will honor a rate lock for 30-60 days, protecting you from increases while you shop for a home.
