Compare Conventional Loan Interest Rates Today

Who has the lowest interest rate? We compare lenders.

Interest rate graphicInterest rates on conventional loans have been on the rise for some time, but they're especially high right now. Despite this increase, there are still a number of options available to borrowers when it comes to financing their purchase. Be sure to compare interest rates and terms before deciding on a loan. 

Types of Conventional Loans

Conforming and non-conforming loans are the two forms of conventional loans.

Conforming loans adhere to the Fannie Mae and Freddie Mac rules, but non-conforming loans do not.

The interest rates on conforming loans are usually lower than those on non-conforming loans, because they are less risky for the lender. Conforming loans “conform' to the lending guidelines of the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Loan amounts that exceed the lending limits of Fannie Mae and Freddie Mac are known as jumbo mortgages. A jumbo loan is considered a non-conforming loan because the loan amount exceeds the lending limits.

3 Conventional Loan Types

There are three types of conforming loans: fixed-rate, adjustable-rate, and hybrid. 

  1. The interest rate on a fixed-rate mortgage remains constant over the life of the loan.
  2. Adjustable-rate mortgages have a fixed interest rate for a certain number of years (usually 3, 5, 7, or 10), after which the interest rate can change every year. 
  3. Hybrid mortgages combine features of both fixed-rate and adjustable-rate mortgages.

The federal government does not insure or guarantee conventional loans. 

Interest rates on conventional loans are usually higher than those on government-backed mortgages, such as FHA, USDA, or VA loans. The reason government backed loans often have a lower interest rate is due to the federal backing.

Want the lowest interest rate? Improve your credit score!

I remember a time when everyone who applied for a mortgage got the same interest rate, regardless of down payment. There were no interest rate adjustments for down payment percentages or credit scores. In fact, lenders didn't use credit scores to evaluate risk until the 90s. 

Times have changed. Fannie Mae and Freddie Mac are quasi-government agencies that supply the mortgage money to lenders. Consequently, lenders must agree to follow the lending guidelines of Fannie Mae and Freddie Mac to participate in their lending programs.

Fannie and Freddie determine your interest rates for a conventional mortgage. 

The down payment and credit score affect the interest rate you obtain from the lender. 

Lenders use credit scores to decide if you are a good financial risk. It can take a while to build up a good credit score, but you can boost your credit score by paying your bills on time.

Increase the down payment

A greater down payment minimizes the amount of money you must borrow and helps you appear less risky to creditors.

How do I improve my credit score?

Step 1 – Pay your bills on time

Step 2 – Pay up on past due accounts

Step 3 – Pay off collection accounts.

Step 4 – Pay down your credit card balances to 30% of the card's balance. Don't pay off your credit cards. Paying off your credit cards can hurt your credit score.

What Loans are Available?

The kind of loan you apply for can influence the mortgage rate you're offered. For example, jumbo loans are non-conforming and tend to have higher interest rates.

- 30-year fixed mortgage rates (conventional, FHA, VA and USDA)

- 20-year fixed mortgage rates (conventional)

- 15-year fixed mortgage rates (conventional, FHA, VA)

- 10-year fixed mortgage rates (conventional)

- 10-year ARM mortgage rates (conventional, FHA, VA)

- 7-year ARM mortgage rates (conventional, FHA, VA)

- 5-year ARM mortgage rates (conventional, FHA, VA)

- 3-year ARM mortgage rates (conventional, FHA, VA)

- Investment property mortgage rates (conventional financing only)

- Second home mortgage rates (conventional financing only)

- Jumbo mortgage rates (conventional, FHA, VA)

How are Conventional Interest Rates Set?

Inflation and unemployment rate fluctuations tend to exert pressure on interest rates.

Markets in the United States will be affected by global events. Political concerns on a global scale might drive mortgage rates up or down. Positive news may result in a rate increase.

The nation's central bank aims to steer the economy with the twin objectives of fostering employment creation and containing inflation. Decisions by the Federal Open Market Committee to raise or reduce short-term interest rates can cause mortgage rates to rise or fall.

Should I wait until interest rates come down?

Whenever mortgage interest rates go up, the knee-jerk response is to do nothing. But what if the interest rates do not come down? You'll be kicking yourself for not biting the bullet and accept the lowest interest rate you can find. And one more point. By waiting, you could be missing out on some great houses. 

When should I submit a mortgage application?

Prior to submitting a mortgage application, you should have a stable source of income and sufficient funds for the down payment and closing charges. If you can save a minimum of 20% for a down payment, you can avoid paying private mortgage insurance (PMI) and qualify for higher interest rates on a traditional mortgage.

When you are prepared to apply is the optimal moment. However, there are more factors to consider when purchasing a property. The slowdown in home sales over the winter and the increase in competition in the spring might impact home prices.

Compare lenders and loan programs

Compare your payment alternatives side-by-side to see which one best suits your financial circumstances.

Our rate chart makes it easy to compare lenders.

Interest rate lock

Interest rate lock graphicAn interest rate lock is a lender's pledge to guarantee the interest rate for a period of time. The lock period can range from 10 days to a year. If the interest rate increases, you will still get the promised interest rate. Interest rates can also go down during the lock period. Unfortunately, if the interest rate falls during the rate lock, the lender will give you the agreed upon interest rate.

If you are afraid that interest rates may drop after you lock in your rate, request a float down from your lender. This option provides the cheaper of the two rates. However, pay close attention to the tiny print. Typically, you may only cut your mortgage rate if it falls by a particular amount, and this choice is likely to include expenses.

Which loan is right for me?

Choosing a mortgage is a lot like working with your doctor for treatment. There are many loan types. Fixed interest rate, adjustable rate and loans that are both fixed and adjustable. 

Conventional Loans

Fannie Mae and Freddie Mac graphicSince conventional loans are not backed by the federal government, the interest rates, credit scores and loan requirements are higher than government backed loans. Conventional loans usually require a minimum 620 (middle) credit score. Conventional loans are offered for both purchase and refinance mortgages.

The conventional mortgages need a 20% down payment (or equity) to avoid the dreaded private mortgage insurance premium, however the PMI will fall off when the loan decreases to 78% to 80% of the loan balance. The loan terms range from 10 to 30 years.

A fixed rate loan means you will pay the same principal and interest payment over the life of the loan.

An adjustable rate loan is a mortgage that has a variable interest rate after a fixed period of time. The 3/1, 5/1, 7/1 and 10/1 are popular adjustable rate options. The adjustable rate mortgages are “fixed” for 3, 5, 7 or 10 year terms and after the fixed rate term, will adjust annually. The interest rate on adjustable rate mortgages is often lower than the fixed rate mortgage.

Investment properties (1 – 4 units) and second homes are eligible for a conventional loan.

Fannie Mae and Freddie Mac offer 3% down payment mortgages. Fannie Mae's Conventional 97 and HomeReady loan programs target first time home buyers and low to moderate income applicants.

FHA Home Loan

FHA logoThe Federal Housing Administration has backed mortgage loans since its inception in 1934. The reason FHA loans are so popular is due to the low down payment and credit score, as well as the easy approval guidelines. Lenders like FHA loans because the FHA loan is backed by Uncle Sam. 

FHA loans only require a 3.5% down payment, and credit scores can dip to 500 with a 10% down payment. A credit score of 580 or higher is preferred. Co-signers and co-borrowers are permitted. The home seller is permitted to pay up to 6% of the buyer's closing costs.

There is mortgage insurance that is paid at settlement and monthly as part of the mortgage payment. The mortgage insurance never goes away, unless the borrower makes a 10% down payment and pays the monthly premium for 11 years. The funding fees help the FHA maintain the FHA mortgage program and reimburses the lender for loans that go into foreclosure.

The FHA offers both purchase and refinance mortgages.

Read more about FHA Loans at

USDA Home Loan

USDA logoThere was a time when rural home buyers had a rough time obtaining a mortgage. Some areas of the country only had one bank and there wasn't an internet to go to. So the United States Department of Agriculture came up with the USDA loan. 

And what a program. There is no required down payment. That's right, zero down. The home seller can pay up to 6% of the home buyer's closing costs. And if the appraisal comes in higher than the sales price, the difference between the sales price and appraised value can be used to cover the closing and prepaid costs.

There may be a downside to the USDA program depending on your circumstances. There is an income limit with USDA loans, although the income limits are very generous.

And one more requirement, the home must be located in an USDA eligible area. I've read that 97% of the U.S. meets the geographic requirement.


Veteran Home Loan

VA logoThe VA home loan program has helped veterans purchase a home since 1944. The VA mortgage does not require a down payment. The home seller is permitted to pay all of the veteran's closing costs and most if not all of the prepaid expenses. Any seller concessions must be agreed to by the seller and be written into the sales contract.

There is a funding fee/mortgage insurance that is paid at settlement; or the VA funding fee can be included in the mortgage. Veterans with a disability rating of at least 10% are free from the financing charge. Recipients of the Purple Heart are likewise exempt. There is no charge for mortgage insurance on a monthly basis.

Read more about VA loans at


In conclusion, there are many factors to consider when deciding whether to take out a conventional loan. Interest rates today are still relatively low, but they may go up in the future. It is important to compare interest rates from different lenders and to choose the one that best suits your needs.