The advertised rate is not your rate
When you see "30-year fixed at 6.875%" on Bankrate or the evening news, that's the rate for an idealized borrower: 760+ credit score, 20% down, primary residence, single-family home, loan size under the conforming limit (~$766,550 in 2026). If any of those assumptions doesn't match you, your rate adjusts.
The factors that raise your rate (loan-level price adjustments)
Fannie Mae and Freddie Mac publish pricing grids — "loan-level price adjustments" (LLPAs) — that translate borrower characteristics into rate add-ons. Key factors:
- Credit score: Below 740? Add 0.25%. Below 720? Another 0.25–0.5%. Below 680? Significant premium.
- LTV (loan-to-value): Less than 20% down adds cost. 10% down vs. 20% down can add 0.25–0.5% depending on credit score.
- Property type: Condos add 0.75%. Investment properties add 2–3% or require different loan programs entirely.
- Loan size: Jumbo loans (above conforming limit) are priced separately by each lender and often carry a premium.
- Cash-out refinance: Higher than purchase or rate-term refinance.
How to actually compare lenders
Don't compare advertised rates — compare Loan Estimates. When you apply with multiple lenders (within a 45-day window, which triggers only one credit inquiry under FICO scoring rules), each must give you a Loan Estimate within 3 business days. The Loan Estimate includes: rate, APR, closing costs, and total interest paid over the loan term. Compare APR — it includes fees and is a more honest comparison than rate alone.
Points and the rate buydown math
One discount point = 1% of loan amount paid upfront to permanently lower the rate by approximately 0.25%. On a $440,000 loan, one point = $4,400 to save 0.25% = ~$61/mo. Break-even: 72 months (6 years). If you'll keep the loan for 10+ years, buying points makes sense. If you expect to refinance or sell in 3–5 years, generally don't buy points.
The rate lock decision
Once you're under contract, lock as soon as you have a closing date you're confident in. Standard lock periods are 30–45 days. Longer locks cost more (typically 0.125–0.25% per additional 15 days). If rates fall after you lock, ask about a float-down option — some lenders offer it for a fee.
