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  • Omega Financial Mortgage

5 Factors That Affect Your Interest Rate

Updated: Aug 12, 2021

Here are five common factors that determine or affect your mortgage interest rate:

1. Your Credit Score: You credit score is based on the borrowing history in your credit report, which summarizes all details about your credit card balances and bill repayment. If you pay your bills on time, your score stays high and lenders view you as a low-risk borrower. Consequently, your mortgage interest rates tend to be lower than a person with a low credit score.

2. The Type of Property: Some properties have a higher risk of default compared to others. This is determined by analyzing the historical likelihood of default on different properties; lenders use this analysis to help determine a borrower's interest rate. For example, second homes tend to have a higher rate of default and lenders typically charge higher rates for such homes.

3. The Size of Your Down Payment: A large down payment gives you a lower LTV (loan-to-value) ratio, which can decrease the level of risk borne by a lender. A smaller down payment, on the other hand, gives you a higher LTV ratio and increases the level of risk borne by a lender. Thus, a larger down payment often means a lower interest rate and vice-versa.

4. Your Loan Amount: Much like a down payment, the amount a loan is taken out for can affect the mortgage interest rate. A large loan bears a higher risk than a smaller one simply because there is more money at risk. You’ll be much more likely to pay a higher interest rate on a larger property loan as compared to a smaller one.

5. The Lender: Much like any other type of business, the lending industry is not standardized in terms of what each lender offers. In other words, different lenders offer different interest rates based on their style of operation, overall appetite for risk, competitiveness in the market, and other factors. It’s important for you to search for offers from different lenders to find the best mortgage rate.


For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

Licensed by the Commissioner of Banks - License No. MB2671

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