Why Your Rate Differs From the Advertised Rate

What it is

The rate you see advertised — on a lender’s site, in an ad, or in a survey like Freddie Mac’s PMMS — is usually a representative average for a borrower with strong credit and standard loan terms. Your actual quoted rate is personalized. Several factors about you, your loan, and the property adjust the rate up or down from that headline number.

What affects your rate

• Credit score. Higher scores generally earn lower rates because they signal lower default risk. Even a modest score difference can move your rate.
• Loan-to-value (LTV) ratio. This is the loan amount divided by the home’s value. A larger down payment (lower LTV) usually means a better rate; a small down payment (high LTV) raises it and may add mortgage insurance.
• Debt-to-income (DTI) ratio. Lenders look at how much of your monthly income goes to debt payments. Lower DTI supports better pricing.
• Loan type and term. Conventional, FHA, VA, and jumbo (larger loans above standard limits) loans price differently, and shorter terms (e.g., 15-year) usually carry lower rates than longer ones.
• Discount points. Paying points up front buys the rate down; the advertised rate may already assume points are paid.
• Occupancy. A primary residence typically prices better than a second home or investment property.
• Property type. Single-family homes often price better than condos or multi-unit properties, which can carry small rate add-ons.

How to think about it

• Advertised ≠ guaranteed. Treat headline rates as a starting reference, not a promise. Only a personalized quote (or a Loan Estimate) reflects your real rate.
• Read the fine print. An eye-catching rate may assume points paid, an excellent credit score, and a large down payment. Compare quotes using APR, not just the headline rate.
• Some factors are within your control. Credit, down payment size, and DTI can often be improved before applying. Others — like property type and occupancy — are fixed by your situation.