Today's national mortgage and refinance rates keep falling: July 24, 2021

For the most part, mortgage rates and refinance rates have fallen since last week and last month. Overall, it's a good day to lock in a low rate.

If you're ready to buy or refinance, you'll probably want a fixed-rate mortgage rather than an adjustable-rate mortgage. ARM rates are starting higher than fixed rates right now, and you'd risk your rate increasing even more in a few years. It's safer to lock in an all-time low rate while you can.

Today's mortgage rates

Conventional rates from Money.com; government-backed rates from RedVentures.

Today's refinance rates

Conventional rates from Money.com; government-backed rates from RedVentures.

What is a mortgage rate?

A mortgage rate is the interest you pay on the money you borrow from a lender to buy or refinance your home. It's basically the fee you pay for borrowing, expressed as a percentage. For example, you may take out a $200,000 mortgage, plus a 2.75% interest rate.

There are two types of mortgage rates: fixed and adjustable.

A fixed-rate mortgage locks in your rate for the entire length of your mortgage. Even if rates in the US market increase or decrease, your rate will stay the same. This is an especially great deal right now, as rates are at historic lows.

An adjustable-rate mortgage keeps your rate the same for a predetermined amount of time, then changes it periodically. A 10/1 ARM locks in your rate for the first 10 years, then the rate fluctuates once per year. This is a riskier approach these days, because ARM rates are starting higher than fixed rates, and you risk your rate going up later.

How are mortgage rates determined?

Mortgage rates are determined by a combination of factors - some you can control, and some you can't.

The main external factor is the economy. Interest rates tend to be higher when the US economy is thriving and lower when it's struggling. The two main economic factors that impact mortgage rates are employment and inflation. When employment numbers and inflation go up, mortgage rates tend to increase.

You can control your finances, though. The better your credit score, debt-to-income ratio, and down payment, the lower your rate should be.

Finally, your mortgage rate relies on what type of mortgage you get. Government-backed mortgages (like FHA, VA, and USDA loans) charge the lowest rates, while jumbo mortgages charge the highest rates. You'll also get a lower rate with a shorter mortgage term.

What credit score do you need for a mortgage?

Each type of mortgage has a different minimum credit score requirement. Here's how it typically breaks down:

• Conforming: 620
• Jumbo: 700
• FHA: 580 (or 500 if you have at least a 10% down payment)
• VA: 640
• USDA: 640

These are just the general rules of thumb, though. Each lender has the right to require a higher or lower credit score. (Although the FHA minimums listed here are the lowest a lender will allow.)

If your credit score is higher than the minimum a lender requires, you could get a better mortgage interest rate.

Learn more and get offers from multiple lenders »

Mortgage rates last week and month

Mortgage rate trends

Over the past month, average rates for 15 and 30-year fixed mortgages have fallen steadily, the opposite of rising ARM rates, which now top 4% by a comfortable margin. Rates for government-backed FHA and VA loans have been among the lowest mortgage rates all along, but still managed to decrease in the past 30 days.

Refinance rate trends

Refinance rates echo the patterns of mortgage rates: Fixed-rate mortgages have fallen in the past week and the past month and ARMs have risen. Government-backed loans, on the other hand, have fluctuated; rates for FHA refinance loans are lower than they were 30 days ago, while rates for VA refinance loans are higher.