Are Refinance Rates the Same as Mortgage Rates?

Here are today’s 30-year fixed mortgage (purchase) and refinance rates. See the difference?

How we source rates and rate trends

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Rate data in the charts and tables above comes from RateUpdate.com. The displayed rates come from multiple providers and represent market averages. Your mortgage rate will differ based on individual factors like your credit score as well as differing loan types and terms offered by lenders.

Why are mortgage and refinance rates different, and what can homeowners do to get a better deal when refinancing?

Refinance Rates vs. Purchase Rates

The term “mortgage rate” is often used to refer to purchase loans — the mortgages you take out when buying a home. While interest costs are generally similar, refinance rates tend to trend slightly higher than purchase rates.

Today’s rates as reported by the Refi.com mortgage rates tracker:

Why Are Refinance Rates Typically Higher?

Several factors cause refinance loans to cost more than purchase loans:

1. Refinances are generally considered riskier than purchase loans, especially when they involve cashing out existing equity.
2. The purchase loan market is more competitive, requiring lenders to offer lower rates to attract buyers.
3. Most refinances involve borrowers lowering their interest rate and monthly payment. Lenders can charge slightly more, and the homeowner is still happy because they’re saving money.

Are Refinance Rates Always Higher?

Not necessarily. Rates are dynamic and guided by market forces, so there may be instances where refi rates briefly dip below purchase rates.

And even when a refinance’s quoted interest rate is equal to or higher than a comparable purchase loan, the annual percentage rate (APR) may still be lower. The APR is a more accurate measure of a loan’s true cost, factoring in closing expenses and fees that vary from loan to loan and lender to lender.

Here are today’s 15-year fixed rates for both purchases and refinances — check the APR and rate differences:

Specific Refinance Options With Lower Rates

While refinance rates as a whole may trend higher than purchase loans, certain refinance options are likely to be lower than your average conventional loan.

Government-backed mortgages secured by the FHA, VA, and USDA typically offer lower refi rates than conventional lenders. That’s because these loans are insured by the federal government, reducing risk for mortgage providers. They also offer streamlined options that are faster and easier for lenders to process.

Adjustable-rate mortgages may also start lower than standard fixed-rate loans, especially those with shorter introductory periods. Here’s a look at today’s refinance rates for various loan types:

FHA Refinance Options

Today’s FHA Mortgage and Refinance Rates

FHA refinances are backed by the Federal Housing Administration and are designed to help borrowers with lower credit access affordable housing. The FHA’s minimum credit score is 500 with at least 10% equity, though most lenders — including Refi.com — require higher. Refi.com requires a minimum 620 credit score for an FHA rate-and-term refinance and 620 for an FHA cash-out refinance.

Borrowers with an existing FHA loan may be able to lower their rate with a low-doc FHA Streamline refinance. Those with other loan types can refinance into the FHA program through the rate-and-term option. All homeowners are also eligible for the FHA cash-out and 203(k) rehab refinance programs.

Keep in mind that FHA loans require a 1.75% upfront mortgage insurance premium and an annual premium of 0.5% to 0.75% of the loan amount in most cases.

VA Refinance Options

Today’s VA Mortgage and Refinance Rates

Available to most Veterans and active-duty service members, VA refinances are backed by the U.S. Department of Veterans Affairs and offer some of the lowest interest rates on the market for eligible borrowers.

Current VA loan holders can apply for the interest rate reduction refinance loan (IRRRL) — also known as the VA Streamline — to simplify the refinance process. All eligible borrowers can apply for a VA cash-out refinance, which allows you to withdraw up to 100% of your home’s equity. VA lenders also offer rehab refinance loans based on the as-completed value of the property.

VA refinances come with a one-time funding fee ranging from 0.5% to 3.3%. Borrowers receiving VA disability benefits may qualify for a funding fee waiver.

USDA Refinance Options

Today’s USDA Mortgage and Refinance Rates

USDA refinances are backed by the U.S. Department of Agriculture and promote homeownership in rural communities. These mortgages are only available to current USDA borrowers and include both streamlined and non-streamlined options. Unlike other government-backed programs, the USDA offers no cash-out or rehab refinance options. All USDA loans carry a 1% upfront and 0.35% annual guarantee fee.

Adjustable-Rate Refinances

Today’s Adjustable Mortgage and Refinance Rates

Unlike fixed-rate mortgages, adjustable-rate mortgages (ARMs) have rates and payments that can change based on market conditions. Depending on rate trends, ARMs may offer a lower introductory rate than fixed-rate refinances — most commonly on 3/6 ARMs, which carry a fixed rate for the first three years before adjusting every six months.

Keep in mind that if interest rates rise, so can your monthly payment. In cases of significant rate shifts, the additional costs could be substantial. Conversely, if rates fall, your payments could decrease as well.

Cash-Out Refinances Carry Higher Rates

Refinances fall into two categories: rate-and-term and cash-out. Rate-and-term refinances let you change the rate, term, and other conditions of your mortgage. Cash-out refinances let you withdraw a portion of your home’s equity as a lump sum along with changes to your loan terms.

While rate-and-term refinance rates may be comparable to — or occasionally lower than — purchase loans, cash-out refinances will almost always be higher. That’s because cashing out reduces your equity, increasing the lender’s risk. In many cases, it also raises your monthly payment, further elevating your borrower risk profile.

Loan Amount Can Affect Your Rate

Jumbo loans — mortgages that exceed Fannie Mae and Freddie Mac’s conforming loan limits for your area — often carry higher rates due to the increased risk lenders take on with larger loan amounts.

Your Financial Profile Affects Your Refi Rate

While macro market conditions set the baseline for all mortgage rates, your personal financial profile significantly influences the rate you’re actually quoted. Here are the key factors:

Your Credit Score

Lenders use your credit score as the foundation for assessing your creditworthiness. A minimum of 620 is typically required to qualify for a conventional refinance, but the best rates go to borrowers with scores of 760 and above.

Here’s how much your score can impact your rate, based on Optimal Blue Mortgage Market Indices data:

Credit Score	Average Rate
>740	6.042%
720–739	6.147%
700–719	6.181%
680–699	6.280%
<680	6.428%

*Average mortgage rates per Optimal Blue as of 10/1/24. Examples only; may not be available.

Some of this rate spread is driven by borrowers with less than 20% equity needing private mortgage insurance (PMI), which itself varies based on credit score. Through MGIC, a borrower with a 630 score typically pays PMI premiums more than three times higher than an identical borrower with a 760.

Your Income and Debt Level

Your income and debt obligations significantly influence the rate you’re offered. A higher income and fewer debts signal lower risk to lenders. Conventional lenders generally require a debt-to-income (DTI) ratio of 45% or less, though well-qualified borrowers may be approved up to 50% in some cases.

Approaching the maximum DTI limit will generally translate to a higher rate. Experts typically recommend keeping your DTI under 36% to get the best deal on a refinance.

Your Built-Up Equity

The more equity you have, the lower the rate you’ll likely qualify for. Lenders assess this through the loan-to-value (LTV) ratio — your new loan amount divided by the home’s current appraised value. A homeowner refinancing $180,000 on a $300,000 home has a 60% LTV.

Borrowers with more equity are less likely to default — and even if they do, the lender stands a better chance of recovering its investment through foreclosure. Both factors make high-equity borrowers less risky and earn them lower rates.

Your Loan Length

Shorter loan terms typically come with lower rates. Opting for a 15-year refinance could reduce your rate by 1% or more compared to a 30-year loan. Keep in mind, though, that a shorter term means larger monthly payments — which could drive up your DTI and offset some of the interest savings.

Here’s what average conventional refinance rates look like across different loan lengths, per the Refi rate tracker:

How we source rates and rate trends

How to Get Lower Refinance Rates

Averages are just that — the average across all qualifying borrowers. If your loan profile is less risky than the typical applicant’s, you’ll likely qualify for more attractive rates. Steps you can take include:

• Monitoring your credit report for errors and disputing anything that’s dragging your score down
• Paying off or consolidating debts to reduce your DTI
• Considering whether a shorter loan term makes sense for your budget

Beyond improving your finances, shopping around is one of the most effective ways to lower your rate. Lenders each have their own risk models, and fees and closing costs can vary significantly. Applying with at least three lenders — and using competing quotes to negotiate — can result in meaningful rate reductions or savings of hundreds or even thousands of dollars in closing costs.

Ready to Find Your Best Refinance Rate?

Understanding how refinance rates work puts you in a stronger position to get the best deal on your new loan. By improving your financial profile and shopping with multiple lenders, you can qualify for lower rates and more affordable monthly payments.

Start your refinance application with Refi.com today.