Most articles on this subject tell you to improve your credit score and shop
around. Both are true and neither is very useful, because they do not tell you
what a lender is actually doing when it produces your number.
A mortgage rate is not one price. It is a base price for the program and the
day, adjusted up or down by a specific list of characteristics of your loan.
Those adjustments are published, they are mechanical, and once you know what is
on the list you can see which parts of your file are still worth changing and
which are already settled.
Here is the list, roughly in order of how much it moves the number.
1. Credit score
The largest single input, and it is priced in tiers rather than on a smooth
curve. The gap between a 719 and a 720 can be larger than the gap between a 680
and a 700, because one crosses a tier line and the other does not.
This is the practical part: if you are sitting a few points below a tier
break, tell your loan officer before you lock. Paying a card down below 30% of
its limit, or having a reporting error corrected, can sometimes move you across
in a few weeks. It is the only item on this list where a small, fast action
occasionally produces a large result.
Also worth knowing: mortgage lenders use older FICO scoring models than the
score your credit card app shows you, and they take the middle of three bureau
scores. The number you have been watching is usually not the number that prices
your loan.
2. Loan-to-value
How much you are borrowing against what the property is worth. More equity
means less risk, and pricing improves at the standard breakpoints — and
below 80%, mortgage insurance drops out of the payment entirely on a
conventional loan.
If you are close to a breakpoint, ask what the next one is worth. Sometimes a
few thousand dollars more down pays for itself quickly; sometimes it does not
and the cash is better kept in reserves.
3. Occupancy
A home you live in prices better than a second home, which prices better than
a rental. This is not negotiable and it is not something to be creative about
— occupancy is certified at closing.
4. Property type
A single-family home is the baseline. Condominiums, manufactured homes and
two-to-four unit properties each carry their own adjustment. Condo pricing in
particular surprises people, and it is worth knowing before you fall for the
unit rather than after.
5. Loan program
Conventional, FHA, VA, USDA and jumbo all price differently, and the headline
rate is a poor way to compare them because it ignores mortgage insurance. An FHA
loan often quotes a lower rate than conventional and still costs more per month
once its insurance is included — and unlike conventional PMI, FHA's
premium usually never comes off.
Compare payments, not rates. If you are eligible for
VA, compare
nothing — it wins.
6. Points
You can buy the rate down by paying points at closing. One point is 1% of the
loan amount. Whether it is worth it is a single calculation: divide the cost of
the points by the monthly savings, and that is how many months you have to keep
the loan to break even.
If the break-even is five years and you expect to move or refinance in three,
points are a bad deal no matter how attractive the lower rate looks. Ask for the
break-even in months, in writing.
This is also the biggest source of misleading rate comparisons. A quote with
two points paid will always look better than a quote with none. Make every
lender quote the same point structure or the comparison means nothing.
7. Lock period
A 15-day lock prices better than a 60-day lock, because the lender is taking
less market risk. Locking longer than you need costs money; locking shorter than
your closing timeline costs more, because extensions are expensive. Match the
lock to a realistic closing date rather than an optimistic one.
8. Loan amount
Very small loans price worse, because the fixed cost of originating them is
spread across less money. Crossing the conforming limit into
jumbo changes
the pricing model entirely. Sitting just over a limit is worth a conversation
— occasionally a slightly larger down payment moves you back under and
saves more than it costs.
How to compare quotes without being fooled
- Collect them on the same day. Mortgage pricing moves with
the bond market daily. A quote from Tuesday and a quote from Friday are not
comparable.
- Compare Loan Estimates, not verbal quotes. The Loan
Estimate is a standardized federal form. Page two lists every cost. A verbal
rate is not a commitment to anything.
- Check the points on each. This is where most apparent
differences come from.
- Look at APR, but do not stop there. APR folds costs into
a single number, which helps, but it assumes you keep the loan for the full
term. Most people do not.
- Shop inside a short window. Credit scoring models treat
multiple mortgage inquiries within a typical 14 to 45 day window as a single
inquiry, so shopping several lenders does not compound the damage to your
score.
What is genuinely outside your control
The base rate itself. Mortgage pricing follows the market for
mortgage-backed securities, which responds to inflation data, Treasury yields
and Federal Reserve policy. No lender is meaningfully cheaper than the market;
what lenders differ on is margin, fees and how well they structure your file.
Which is the actual argument for working with someone who will run your file
two or three different ways before quoting it. The structure is where the
savings are.
See
today's Texas rates, or
ask us to price your
file two ways and show you both.
Last reviewed: August 2026.
Rates and pricing adjustments change daily and vary by borrower and
property. Nothing here is a rate quote or a commitment to lend. Texas United
Mortgage, LLC, NMLS #2442778. Equal Housing Lender.
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