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What Affects Mortgage Rates?

Your mortgage rate is affected by a number of factors, such as your credit score, the type of rate you choose and your property’s location. By knowing more about these factors, you can improve your chances of qualifying for a better rate.

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Changes in the economy also affect your mortgage rate. The ups and downs of the housing market, inflation and government policy all influence what your rate looks like.

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Loan-to-value ratio

Loan-to-value (LTV) ratio is the amount you want to borrow divided by the value of your home. The less you need to borrow, the lower your LTV is and the lower your interest rate will be.

Your LTV ratio is:

75%

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Debt-to-income ratio

Your rate is affected by your debt-to-income (DTI) ratio, which is the percentage of your income you use each month to pay off debts. Generally, borrowers may qualify for a mortgage if their DTI is 43% or lower, however DTI requirements may differ based on the loan you’re applying for.
You can bring your DTI ratio down by paying off your credit cards and reducing debt.

Your DTI ratio is:

33%

Related Topics

Learn how monthly payments work

Typically, your mortgage payment is made up of principal, interest, taxes and insurance.

Learn More

Consider your mortgage options

Consider key factors, like the type of loan, the interest rate and the loan term.

Learn More

Calculate what you can afford

Estimate a home price to see what you can afford as you shop for a new home.

Learn More

Find the mortgage option that’s right for you.  

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