Why Are Advertised Mortgage Rates Lower Than Your Quote?
Because the ad usually describes a different loan. Advertised rates tend to assume top credit, a large down payment and sometimes discount points paid at closing, and they're often for a shorter term or an adjustable rate. Your quote is priced on your actual file. Line up the same term, product and assumptions, and compare the APR, and the two numbers usually get much closer.
Last updated September 29, 2026What makes an advertised rate different from your quote?
An ad is built around one borrower profile, usually a strong one: a high credit score, a big down payment and sometimes points already paid. Your quote reflects your own credit score, loan-to-value and loan type. If those don't match the ad's assumptions, your rate will be higher.
The advertised rate isn't made up. Under Regulation Z, a lender can advertise specific terms only if it actually offers them. And an ad that states a rate has to show the APR too. The APR folds in points and certain fees, so it's the better number to compare.
How much do credit score, down payment and points matter?
A lot. Credit score and loan-to-value are two of the biggest factors in mortgage pricing, so a lower score or a smaller down payment usually means a higher rate. Discount points work the other way: each point costs 1% of the loan amount up front and buys the rate down. An advertised rate may assume points you haven't planned to pay.
Why do loan types and terms change the rate?
An advertised rate is tied to a specific product and term.
It depends on your situation:
- The ad is for an adjustable-rate loan: the rate is fixed only for an initial period, often 3, 5, 7 or 10 years, and then adjusts. A 30-year fixed for the same borrower usually costs more.
- The ad is for a 10- or 15-year loan and you want 30 years: shorter terms usually carry lower rates, so your 30-year quote will be higher.
- You're financing an investment property, a second home or a second lien: those are priced higher than a first mortgage on a home you live in.
- Your credit and equity are strong and the loan matches the ad: your quote may come close to the advertised rate.
| Adjustable rate in the ad | Fixed only for the first few years, then adjusts |
|---|---|
| Discount points | 1% of the loan amount per point, paid to lower the rate |
| Credit score and loan-to-value | Major drivers of your rate |
| Investment property, second home, second lien | Priced higher than a primary-residence first mortgage |
| 15-year versus 30-year | The 15-year rate is usually lower |
| Advertising rules | Advertised terms must actually be offered, and a stated rate needs its APR alongside |
Related questions
Sources
- https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/
- https://www.consumerfinance.gov/ask-cfpb/what-are-rate-caps-with-an-adjustable-rate-mortgage-arm-and-how-do-they-work-en-1951/
- https://singlefamily.fanniemae.com/media/9391/display
- https://www.myfico.com/credit-education/blog/credit-score-mortgage-rates
- https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/
- https://singlefamily.fanniemae.com/news-events/lender-letter-ll-2022-01-loan-level-price-adjustments-second-home-and-high-balance-loans
- https://www.freddiemac.com/pmms
- https://www.consumerfinance.gov/rules-policy/regulations/1026/24/
- https://www.bankrate.com/home-equity/current-interest-rates/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.