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Current conventional mortgage rates
Current conventional mortgage rates
Since mid-July, rates have been trending downward and have held steady in the 6 to 7 percent range. While it's uncertain how low rates could go before the end of the year, these lower rates can make new mortgages more manageable than when rates hit a peak of 8 percent in October 2023.
Here are national rates across various types of conventional mortgages:
National mortgage rates by loan type
Product | Interest Rate | APR |
---|---|---|
30-Year Fixed Rate | 6.88% | 6.93% |
15-Year Fixed Rate | 6.14% | 6.22% |
5-1 ARM | 6.14% | 6.94% |
30-Year Fixed Rate FHA | 7.00% | 7.04% |
30-Year Fixed Rate VA | 6.94% | 6.98% |
30-Year Fixed Rate Jumbo | 6.81% | 6.86% |
Rates as of Thursday, October 31, 2024 at 6:30 AM
What is a conventional mortgage?
A conventional loan is a home loan that isn’t insured by a government agency. It’s the most popular type of mortgage in the U.S., and comes with a fixed or adjustable rate and in varying loan terms, such as 30 or 15 years.
How are conventional mortgage rates determined?
Mortgage lenders determine the fixed rates on conventional mortgages based on two main factors: 10-year Treasury rates and demand by investors in mortgage-backed instruments. For an adjustable-rate conventional loan, lenders look to the Secured Overnight Financing Rate (SOFR). When you borrow, a variety of factors affect the rate you pay, including your credit score, debt-to-income (DTI) ratio and loan-to-value (LTV) ratio. Here’s more on how to get the best mortgage rate.
How to get the best conventional mortgage rate
While forces in the broader economy impact conventional mortgage rates, the specific rate you’ll get is largely determined by your credit and finances. In general, the higher your credit score, down payment and income, the better your rate. Here are some steps to get the best rate possible for your situation:
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Step 1: Strengthen your credit score
Review your credit history and scores. Remember: Conventional loans have a higher credit minimum compared to other mortgage types. If your credit needs work, now’s the time to address it.
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Step 2: Determine your budget
A lender might offer you a certain loan amount, but that doesn’t mean you have to spend it. Have a good understanding of how much house you can afford.
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Step 3: Compare rates and terms from several lenders
Rate-shop with at least three different lenders. This can help you uncover the best rates and lowest fees.
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Step 4: Get preapproved for a mortgage
Getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation. You’ll also need this when you’re ready to make offers on homes.
Conventional loan requirements
Conventional loans often have stricter borrower requirements than government-insured FHA, VA and USDA loans. In general, to qualify for a conventional loan, you’ll need:
- A 620 minimum credit score
- 3%-5% minimum down payment
- Maximum 43% debt-to-income (DTI) ratio
- At least two years of consistent employment and steady income
Although these are the minimum standards, there are exceptions (for example, some lenders allow up to a 50 percent DTI ratio). As with any type of mortgage, to qualify for the best rates, you’ll need a good to excellent credit score.
Some conventional loan programs allow you to put down as little as 3 percent to 5 percent, but the tradeoff is you’ll need to pay for private mortgage insurance (PMI), a cost added on to your monthly mortgage payment. PMI protects the lender — not you — if you default on your loan, and you’ll need to pay this until you accumulate 20 percent equity in your home. If you can make at least a 20 percent down payment upfront instead, you won’t have to pay this expense.
The down payment requirement for a conventional loan can also depend on what type of property you’re financing. If you’re buying an investment property, for instance, you might be required to put down at least 15 percent.
Who should consider a conventional loan?
Consumers have many types of home loans to choose from. Any borrower with solid credit, low debt and established income should consider a conventional loan. They are available to first-time and trade-up homebuyers, as well as those who are downsizing. Investors in single-family or multi-family dwellings might also consider conventional mortgages.
In contrast, borrowers with less-solid credit scores and limited cash reserves might choose a mortgage backed by the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA). These mortgages typically carry lower requirements around credit scores and down payments.
Should you get a conventional mortgage?
To help you gauge whether a conventional loan is right for you, here’s how this type of mortgage stacks up against others:
Minimum credit score | Minimum down payment | Mortgage insurance | Maximum DTI ratio | |
---|---|---|---|---|
Conventional loan | 620 | 3% - 5% | Yes if less than 20% down | 45% |
FHA loan | 580 | 3.5% | Yes if less than 20% down | 43% |
VA loan | None | None | No | 41% |
USDA loan | None | None | No | 41% |
Note these are standard requirements. Some lenders might be more flexible with some criteria, such as DTI ratio, especially if you have solid financials overall.
Still, conventional loans don’t work for every situation. Here are the positives and downsides:
Pros of conventional loans
- Can be used to finance a range of property types: Single-family homes, townhomes, vacation homes, condos — all of these and more can be financed with a conventional loan.
- No loan limit: Conventional loans include jumbo loans, which aren’t beholden to FHFA loan limits.
- Lower down payment: Conventional loans can be had with as little as 3 percent down.
- No upfront mortgage insurance: Unlike an FHA loan with a lower down payment, you don’t need to pay an upfront mortgage insurance premium on a conventional loan with a lower down payment.
- Can cancel mortgage insurance: Once you reach 20 percent equity, you can cancel mortgage insurance on a conventional loan. You can’t do this with an FHA loan, in most cases.
Cons of conventional loans
- Can be harder to qualify with a lower credit score: Conventional loan lenders typically require a credit score of at least 620.
- Can have higher interest rates: Conventional loans might have slightly higher interest rates than government-insured loans.
- Mortgage insurance if less than 20 percent down: You can put down as little as 3 percent on a conventional loan, but if you don’t put down at least 20 percent, you’ll have to pay mortgage insurance premiums on top of your mortgage payment.
Additional resources on conventional mortgages
Jumbo vs. conventional loans: Learn what separates the two loan types and why it’s tougher to qualify for a jumbo loan.
FHA vs. conventional loans: Find out whether the easier credit qualifications of FHA-backed mortgages are better for your finances.
VA vs. conventional loans: If you’re eligible for a VA-backed mortgage, you can likely score a better deal than you would with a conventional loan.
Mortgage calculator: Forecast how much your monthly payment would cost based on your rate, term and down payment.
Meet our Bankrate experts
Written by: Jeff Ostrowski, Principal Reporter, Mortgages
I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.
Edited by: Laurie Richards, Editor, Home Lending
I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English.
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