When you see a mortgage rate advertised, it represents a best-case scenario — a specific borrower profile, loan type, and property type. Your actual rate will be higher or lower depending on several factors, most of which you can influence. Here's what really determines the rate you'll pay in DC.
Factor 1: Credit Score
Your credit score has the single largest impact on your mortgage rate. Lenders use FICO scores from all three bureaus (Experian, TransUnion, Equifax) and typically use the middle score.
Rate Impact by Score Range
| FICO Score | Approximate Rate Adjustment |
|---|---|
| 760+ | Best available rate |
| 740-759 | +0.125% |
| 720-739 | +0.25% |
| 700-719 | +0.375% |
| 680-699 | +0.5-0.75% |
| 660-679 | +0.75-1.25% |
| 640-659 | +1.25-1.75% |
| 620-639 | +2.0%+ |
Real dollar impact: On a $400,000 loan, the difference between a 740 score (6.25%) and a 680 score (6.75%) is about $135/month or $48,600 over 30 years.
How to Improve Your Score
- Pay down credit card balances (utilization under 30%, ideally under 10%)
- Make every payment on time for 6+ months
- Don't open new credit accounts before applying
- Dispute errors on your credit reports
- Keep old accounts open (length of credit history matters)
Factor 2: Down Payment / Loan-to-Value Ratio
The more you put down, the less risk for the lender — and the better your rate.
| Down Payment | LTV | Rate Impact |
|---|---|---|
| 25%+ | 75% LTV | Best rate tier |
| 20% | 80% LTV | Slightly higher, no PMI |
| 10-19% | 81-90% LTV | Higher rate + PMI |
| 5-9% | 91-95% LTV | Higher rate + higher PMI |
| 3-3.5% | 96.5-97% LTV | Highest rate tier + PMI |
The rate adjustment between 20% down and 3% down is typically 0.25-0.5%.
Factor 3: Loan Type
Conventional vs. FHA vs. VA
| Loan Type | Typical Rate | Notes |
|---|---|---|
| VA | Lowest | Government guarantee reduces risk |
| Conventional (high score) | Low | Best rates at 740+ score with 20%+ down |
| FHA | Moderate | Plus upfront and annual mortgage insurance |
| Conventional (lower score) | Higher | Risk-based pricing widens at lower scores |
| Jumbo | Varies | Can be lower or higher than conforming |
VA loans typically offer rates 0.25-0.5% lower than conventional loans because the government guarantee eliminates default risk for lenders.
Fixed vs. Adjustable
| Product | Typical Rate | Best For |
|---|---|---|
| 30-year fixed | Highest fixed rate | Long-term certainty |
| 15-year fixed | ~0.5-0.75% lower | Faster payoff, lower total interest |
| 7/1 ARM | ~0.5-1.0% lower (initial) | Staying 5-7 years, then selling/refinancing |
| 5/1 ARM | ~0.75-1.25% lower (initial) | Staying 3-5 years |
DC context: If you're buying a starter home or condo and expect to move within 5-7 years, an ARM can save significantly. The risk is if you end up staying longer and rates have risen.
Factor 4: Property Type
Lenders charge more for properties they consider higher risk:
| Property Type | Rate Adjustment |
|---|---|
| Single-family home | Base rate |
| Condo (warrantable) | +0.0-0.125% |
| Condo (non-warrantable) | +0.25-0.75% |
| 2-4 unit property | +0.25-0.5% |
| Investment property | +0.5-0.75% |
| Co-op | +0.125-0.25% |
DC impact: Since DC has a high concentration of condos, many buyers face the condo adjustment. Non-warrantable condos (common in small converted buildings) carry the biggest premium.
Factor 5: Occupancy
| Occupancy | Rate Adjustment |
|---|---|
| Primary residence | Base rate |
| Second home | +0.25-0.5% |
| Investment property | +0.5-0.75% |
Investment properties pay the most because default rates are higher — investors are more likely to walk away from an underwater investment than from their home.
Factor 6: Loan Amount
Conforming vs. Jumbo
- Conforming (up to $832,750): Standardized pricing backed by Fannie Mae/Freddie Mac
- High-balance conforming ($832,750 to $1,249,125 in DC): Still agency-backed, with a modest pricing adjustment — this band exists because DC is a designated high-cost area
- Jumbo (above $1,249,125 in DC): Portfolio-priced by each lender
Jumbo rates are sometimes lower than conforming rates because lenders compete for high-value borrowers. But they can also be higher in volatile markets. Always compare.
Low-Balance Adjustments
Smaller loans (under $150,000) may carry slightly higher rates because the lender's fixed costs represent a larger percentage of the loan.
Factor 7: Rate Lock Period
| Lock Period | Rate Impact |
|---|---|
| 15 days | Lowest |
| 30 days | Base rate |
| 45 days | +0.125% |
| 60 days | +0.125-0.25% |
Longer locks cost more because the lender bears more interest rate risk. In DC's condo market, where closings take 45-60 days, you may need a longer lock.
Discount Points
You can pay upfront to reduce your rate:
- 1 point = 1% of the loan amount = approximately 0.25% rate reduction
- On a $400,000 loan, 1 point costs $4,000 and saves ~$65/month
- Breakeven: About 5 years
Points make sense if you plan to stay in the home long-term. They don't make sense if you'll sell or refinance within 5 years.
How to Get the Best Rate
- Improve your credit score before applying — this has the largest single impact
- Save for a larger down payment — even moving from 5% to 10% can help
- Shop multiple lenders — rates vary by 0.25-0.5% between lenders on the same day
- Compare the same loan type — make sure you're comparing 30-year fixed to 30-year fixed
- Consider the total cost — a lower rate with high fees may cost more than a slightly higher rate with low fees
- Lock at the right time — rates change daily. When you're happy with a rate, lock it.
- Ask about relationship discounts — some banks offer rate reductions for existing customers or large deposit balances
Reading a Loan Estimate
Every lender must provide a standardized Loan Estimate within 3 business days of your application. Compare:
- Section A: Origination charges (lender fees)
- Section B: Services you cannot shop for
- Section C: Services you can shop for
- Interest rate and APR: APR includes fees, making it better for comparison
- Total interest percentage: How much interest you'll pay over the life of the loan
The APR is the most useful single number for comparing offers, but also look at total lender fees and monthly payment separately.
Your mortgage rate isn't just a number that happens to you — it's the result of factors you can actively manage. Start early, optimize what you can control, and shop aggressively.
Ready to take the next step? See our current sample rates or get pre-qualified — two minutes, no credit pull.