This rate feels too high? What actually determines the rate I qualify for?

What determines the mortgage rate I qualify for?

You're wondering what factors determine the mortgage rate you qualify for and why yours feels higher than expected. Several components work together to set your specific rate, and lenders evaluate each one when pricing your loan.

Your credit score carries the most weight—higher scores typically unlock lower rates. The loan amount compared to your home's value (loan-to-value ratio) also matters, with lower ratios often earning better pricing. Your debt-to-income ratio, employment history, and down payment size all influence the rate. The loan type (conventional, FHA, VA) and term length (15-year, 30-year) affect pricing too.

Check your Loan Estimate against current market rates for borrowers with similar profiles. Compare the interest rate, annual percentage rate, and any discount points you're paying. Different lenders may quote different rates for the same borrower based on their pricing models and risk appetite.

You can shop around with other lenders, ask about buying down the rate with discount points, or work on improving factors like your credit score or down payment amount. Share your Loan Estimate with other lenders and they can explain how their pricing compares to what you're seeing.