What Goes Into a Mortgage Rate Quote? 10 Factors That Affect Your Rate

One of the most common questions I get is some version of “what’s your rate?” It’s a fair question — but the honest answer is: it depends. Mortgage rates aren’t one-size-fits-all. They’re priced individually based on the specific details of your loan, your property, and you as a borrower.

Here’s what I actually need to know before I can give you an accurate rate quote — and why each factor matters.

Why Mortgage Rates Are Priced Individually

Fannie Mae and Freddie Mac use a system called Loan Level Price Adjustments (LLPAs) — risk-based pricing add-ons (or reductions) that are layered onto a base rate depending on the characteristics of your loan. The riskier the loan profile, the higher the pricing adjustment. These adjustments stack on top of each other, which is why two borrowers asking the same question on the same day can end up with meaningfully different rates.

LLPAs have evolved over the years. In 2023, Fannie Mae and Freddie Mac overhauled the pricing grid — changes that generated significant debate in the industry. The takeaway for consumers: the pricing system is complex, it changes, and it’s another reason why a quote needs to be based on your actual scenario.

When I prepare a rate quote, I run your scenario through our pricing engine, which pulls live pricing from all the lenders we work with simultaneously. Different lenders can price the same loan differently depending on where they have pricing advantages at any given moment. Here are the 10 factors I need before I can give you a real number.

The 10 Factors That Go Into Pricing Your Mortgage Rate

1. Loan Amount (and Any Second Mortgage or HELOC Balance)

The size of your loan affects both which loan category you fall into (conforming vs. jumbo, for example) and how pricing adjustments apply. If you have an existing second mortgage or HELOC, that balance factors into your combined loan-to-value ratio, which also affects pricing.

2. Property Value or Sales Price

For a purchase, this is the sales price. For a refinance, it’s the estimated current value. Combined with your loan amount, this determines your loan-to-value ratio (LTV) — one of the most significant pricing factors in the entire quote.

3. Loan Purpose

Is this a purchase, a rate-and-term refinance, or a cash-out refinance? Each is priced differently. Cash-out refinances typically carry higher LLPAs than rate-and-term refinances, all else being equal.

4. Occupancy

Primary residence, second home, or investment property — these are priced in that order from most favorable to least favorable. An investment property loan carries meaningfully higher pricing than the same loan on a primary residence.

5. Credit Score

Lenders use your mid-score — the middle of the three scores from Equifax, Experian, and TransUnion. If there are two borrowers on the loan, the lower of the two mid-scores is typically used. Even a one-point difference can matter: a borrower at 719 will often see different pricing than a borrower at 720, because LLPA pricing tiers fall at specific score thresholds.

6. Property Type

A detached single-family home, a condo, a townhouse, a 2–4 unit property — each is priced differently. Condos, in particular, carry additional scrutiny. A unit in a condo complex with budget issues or high investor concentration may be priced higher or may not qualify for conventional financing at all.

7. Loan Type

Conforming (Fannie Mae/Freddie Mac), FHA, VA, USDA, jumbo — each program has its own pricing structure. FHA loans carry mortgage insurance premiums regardless of down payment. VA loans have a funding fee (with exceptions). Jumbo loans are priced based on individual lender appetite and portfolio risk, not agency guidelines.

8. Loan Term

30-year, 20-year, 15-year, or other. Shorter terms typically come with lower rates, but higher monthly payments. The right term depends on your financial goals, not just the rate.

9. Fixed or Adjustable Rate (ARM)

A fixed rate stays the same for the life of the loan. An adjustable-rate mortgage (ARM) is fixed for an initial period — typically 5, 7, or 10 years — and then adjusts periodically based on a market index. ARMs can offer lower initial rates but carry future uncertainty. Whether an ARM makes sense depends on how long you plan to keep the loan.

10. Rate Lock Period

Rates are priced based on how long you need the rate held — typically 15, 30, 45, or 60 days. A shorter lock period generally means better pricing; a longer lock costs more because the lender is carrying more interest rate risk. For purchases, the lock period is tied to your anticipated closing date.

Why “Advertised Rates” Often Don’t Apply to You

Static rates — the ones posted on websites without disclosing the assumptions behind them, or quoted on TV and radio commercials recorded days in advance — are almost never what you’ll actually get. They may be based on a perfect-scenario borrower: 780 credit score, 25% down, detached single-family primary residence, 30-day lock. If your scenario differs in any of those dimensions, your rate will differ too.

Rates also change throughout the day as mortgage-backed securities (bonds) trade. A rate that was accurate at 9 a.m. may not be accurate at 2 p.m. This is why a responsible rate quote is always tied to a specific moment in time — and why I provide a detailed written quote that includes the rate, APR, and all closing costs associated with your specific transaction.

If a loan officer quotes you a rate over the phone without asking for the information above, that number isn’t reliable. A real quote requires real details.

Ready for an Accurate Rate Quote?

I’m happy to prepare a detailed, no-obligation rate quote for any home purchase or refinance in Washington State. I’ll show you the rate, APR, and a full breakdown of costs — based on your actual scenario, not a generic assumption.

Request a Rate Quote →