Mortgage Rates by Credit Score: How Much Your Score Really Costs You

Your credit score doesn't just determine whether you get approved for a mortgage — it directly controls how much that mortgage costs you. The difference between a 760 score and a 620 score on the same loan can mean hundreds of dollars per month and six figures in total interest over 30 years.

This guide shows you exactly how credit scores translate to mortgage rates, what those differences cost in real dollars, and what you can do about it.

How Credit Scores Influence Mortgage Pricing

Mortgage lenders use a risk-based pricing model. Your credit score is the primary indicator of how likely you are to default. Higher scores equal lower risk, which means lower rates.

Loan-Level Price Adjustments (LLPAs)

For conventional loans (Fannie Mae and Freddie Mac), pricing adjustments are systematic. The agencies publish matrices called Loan-Level Price Adjustments that add or subtract from the base rate depending on:

• Credit score
• Loan-to-value ratio (LTV)
• Loan type (purchase, rate-term refinance, [cash-out refinance](/blog/cash-out-refinance-guide))
• Property type (single-family, condo, multi-unit, investment)
• Occupancy (primary, second home, investment)

These adjustments are expressed as percentages of the loan amount and translate directly to interest rate changes.

How LLPAs Work in Practice

For a primary residence, 30-year fixed, 80% LTV:

Note: These adjustments are approximate and change periodically. Higher LTV ratios increase the adjustments further.

2026 Estimated Mortgage Rates by Credit Score

Based on current market conditions, here are estimated 30-year fixed rates for a $400,000 primary residence purchase:

The spread: A borrower with a 760 score pays $2,398/month. A borrower with a 620 score pays $2,831/month. That's a $433/month difference — or $155,954 more over 30 years — for the same house, same loan amount, same down payment.

The Real-Dollar Impact at Different Loan Amounts

$250,000 Mortgage

$400,000 Mortgage

$600,000 Mortgage

The larger the loan, the more your credit score matters. On a $600,000 loan, the difference between a 760 and a 620 score is nearly a quarter million dollars.

Credit Score Impact on PMI

If your down payment is less than 20%, you'll pay [Private Mortgage Insurance](/blog/mortgage-insurance-pmi-guide) (PMI). Your credit score dramatically affects PMI rates too:

On a $380,000 loan (95% LTV on a $400,000 home), PMI for a 620-score borrower could be $530 to $760 per month compared to $114 to $171 for a 760-score borrower. That's an additional $400+ per month beyond the rate difference.

How FHA Rates Compare

FHA loans are designed for borrowers with lower credit scores, but even FHA pricing varies:

• [FHA mortgage insurance](/blog/fha-loan-requirements-2026) is flat regardless of credit score: 1.75% upfront + 0.55% annually (for most loans)
• Interest rates still vary by score, though the spread is narrower than conventional
• FHA becomes more attractive than conventional around the 660–680 range because the flat MIP can be cheaper than high-score-adjusted conventional PMI

When FHA Beats Conventional

For a broader look at loan programs, see our [[[mortgage types](/blog/complete-guide-to-home-financing) compared](/blog/mortgage-types-compared-2026) guide](/blog/mortgage-types-compared-2026).

VA Loan Rates by Credit Score

VA loans don't have LLPAs based on credit score the way conventional loans do, making them exceptionally valuable for lower-score veterans:

• No PMI regardless of credit score
• VA funding fee is based on down payment and usage, not credit score
• Individual lenders still adjust rates based on score, but the spread is much smaller
• A veteran with a 640 score might pay only 0.25%–0.50% more than one with a 760 score

This is one of the most significant benefits of VA eligibility.

Strategies to Get a Better Rate Based on Your Score

If You're 5-20 Points From the Next Tier

The biggest rate improvements happen at tier boundaries. If you're close to a threshold, small credit actions can have outsized rate benefits:

Quick wins to boost your score:

1. Pay down credit card balances — getting below 30% utilization is good; below 10% is excellent
2. Don't close old accounts — length of credit history matters
3. Dispute errors — check all three bureaus and dispute any inaccuracies
4. Become an authorized user on a family member's old, well-managed card
5. Pay off small collection accounts (if the collector will agree to remove the item)

For comprehensive strategies, see our guides on reaching a 700 credit score and achieving an 800 score.

If You're 50+ Points Below Where You Want to Be

A longer-term approach is needed:

1. Make every payment on time for 6 to 12 months
2. Systematically reduce revolving debt
3. Avoid all new credit applications
4. Consider a credit-builder loan
5. Let negative items age (their impact diminishes over time)

Buy Points to Lower Your Rate

If improving your score isn't feasible before buying, you can purchase [discount points](/blog/mortgage-points-explained):

• One point = 1% of the loan amount
• Each point typically lowers your rate by 0.25%
• Makes sense if you plan to stay in the home 5+ years
• Calculate the break-even point: cost of points ÷ monthly savings = months to recoup

Example: On a $400,000 loan, one point costs $4,000 and saves $66/month. Break-even is 61 months (about 5 years).

Use a Co-Borrower With a Higher Score

For joint applications, lenders typically use the lower of the two borrowers' middle scores. However:

• If only one borrower needs to be on the loan, using the higher-score borrower alone may get a better rate
• The trade-off: only one income counts for qualification
• This strategy works best when one borrower has a high score and the other has a lower score with minimal income

Shop Multiple Lenders

Rate spreads between lenders can be 0.25% to 0.50% even for the same credit score. Shopping costs nothing (within a 14-45 day window, multiple mortgage inquiries count as one). Use our [[mortgage lender comparison](/blog/mortgage-lender-comparison-guide) guide](/blog/mortgage-lender-comparison-guide) for a structured approach.

The Score Improvement ROI

Improving your credit score before applying is one of the highest-return investments you can make:

Scenario: You raise your score from 680 to 740 before applying for a $400,000 mortgage.

• Rate improvement: approximately 0.375%
• Monthly savings: approximately $100/month
• 30-year savings: approximately $36,000
• Time invested: 3 to 6 months

Where else can you invest a few months of effort and save $36,000?

Monitoring Your Score Before and During the Process

• Check your FICO score monthly while preparing (many credit cards now offer free FICO scores)
• Don't check right before applying — your lender will pull the authoritative score
• After pre-approval, protect your score by avoiding new credit applications and keeping balances stable
• Be aware that the score your lender pulls may differ from free scores — mortgage FICO models are different

Final Thoughts

Your credit score is the single most controllable factor in your mortgage rate. Unlike home prices, interest rate markets, or lending regulations, your credit score is something you can actively improve.

Whether you're months away from buying or years out, understanding how your score translates to real dollars should motivate every financial decision you make. Even a 20-point improvement near a tier boundary can save you tens of thousands over the life of your loan.

Check your score, understand your tier, and take strategic action. The math speaks for itself. When you're ready, start with our [[mortgage pre-approval checklist](/blog/mortgage-preapproval-checklist)](/blog/mortgage-preapproval-checklist) to see exactly where you stand.

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