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Mortgage rates have come down significantly since peaking in late 2023 and are widely expected to continue to fall for the foreseeable future.
However, it isn’t just the current interest rate environment that determines the mortgage rate you get — your credit score can also have more of an impact than you might think.
With that in mind, here’s a rundown of how much your credit score can affect your mortgage rate, and how much money a better score could potentially save you when buying a home.
Mortgage rates by credit score
According to recent data published on myFICO.com, here’s a breakdown of the average mortgage rates by credit score:
| FICO® Score Range | Average APR |
|---|---|
| 760–850 | 6.883% |
| 700–759 | 7.171% |
| 680–699 | 7.311% |
| 660–679 | 7.359% |
| 640–659 | 7.476% |
| 620–639 | 7.604% |
Are you thinking of buying or refinancing a home? Click here to get your customized mortgage rates from some of our favorite lenders.
Here’s what it means to you
To be perfectly clear, the average mortgage rates fluctuate daily, and depending on when you read this, could be significantly different than you see in the chart above.
However, the numbers themselves aren’t the most important thing here — the main point to notice is that there’s more than a 0.7 percentage point difference between the highest and lowest credit tiers on the list.
Here’s why this is so important. Let’s say that you want to buy a home, and you’ll need to take out a $400,000 fixed-rate 30-year mortgage. If you have a FICO® Score of 775, you can expect a monthly principal and interest payment of $2,630.
But if you have a score of 670, which is generally considered to be “good credit,” you can expect to pay $2,758 per month for the exact same home.
This is a difference of:
- $128 per month
- $1,536 per year
- $46,080 over the life of a 30-year mortgage loan
To put it mildly, the difference between what you’ll end up paying with a good credit score and what you’ll end up paying with an excellent credit score can be more than you expect.
Rates are forecasted to fall — get ready now!
The Federal Reserve is widely expected to continue lowering its benchmark interest rate for the foreseeable future, and most projections call for mortgage rates to move in the same direction. Fannie Mae predicts that 30-year mortgage rates will fall to 5.7% by the end of 2025, and the Mortgage Bankers Association (MBA) has a similar 2025 year-end forecast of 5.8%.
However, keep in mind that these are just averages. Based on the chart above, this implies that borrowers in the top credit tiers could see rates below 5.5%, while lower-credit borrowers would likely still get mortgage rates in the 6% range or higher.
So, if you’re thinking about buying a home or refinancing an existing mortgage, it could be a smart idea to wait for a little while and maximize your credit score in the meantime. Over a period of several months, strategies such as aggressively paying off credit card debt can have a big impact.
Here’s another tip: The FICO credit scoring formula only considers new credit inquiries from the previous year, so by simply not applying for any new credit, it could have a positive impact on your score.
These are just a couple of examples, but the bottom line is that the combination of a falling-rate environment and an improved credit score can quite literally save you tens of thousands of dollars (or more) in interest on a home purchase.
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