It is every American’s dream to have a house of their own. To help you with that, here are the 10 states with the lowest mortgage rates in the US
Mortgage rates are constantly changing. In addition to a homebuyer’s creditworthiness, the location, economy, and prevailing trends in the market can influence interest rates. The state and city where you plan to buy a house can also affect your rate and monthly payments.
Whether you are a first-time homebuyer or taking another swing at the housing market, it’s vital to know the states where you can minimize your mortgage costs.
For this reason, Mortgage Professional America compiled the list of US states with the lowest mortgage rates. We also listed other important details that might help if you decide to buy a home.
Which state has the lowest homeowner mortgage?
Alaska has the lowest homeowner mortgage rate in the US based on a 30-year fixed term rate. We used this metric as this is the most popular type of mortgage. A 30-year fixed term mortgage is preferred by most homeowners. Extending the loan over a 30-year period allows for a more affordable monthly payment.
Over the past year, the rates in the state of Alaska have only slightly increased, about 0.2% higher than the previous year’s rate. Citizens in Alaska will have to pay about $357,535 if they wish to purchase a house.
Top 10 states with the lowest home mortgage rates
Mortgage rates depend on what state you’re in. Using the numerical values provided by Business Insider, we’ve listed the top ten states that have the lowest mortgage rates in the US. Again, they are ranked based on a 30-year fixed term rate for purposes of accuracy:
1. Alaska
30-year fixed term rate: 6.34%
20-year fixed term rate: -
15-year fixed term rate: 6.13%
Average house price: $357,535
7/1 ARM: -
As stated above, residents in Alaska have more flexibility when it comes to their monthly payments. This state also has the Alaska Housing Finance Corporation (AHFC), more commonly known as Alaska Housing. They offer a wide range of programs that cater to first-time buyers such as the First Home mortgage program and the First Home Limited mortgage program.
The difference between the two programs is the required salary amount of the house buyer. Under First Home, there are no income or purchase price limits, but lower interest rates are available to certain eligible borrowers.
First Home Limited is like the First Home mortgage program except there are additional requirements. The homebuyer needs to pass a set of criteria apart from their salary amount. These are the income limit and purchase price limit. The amounts for both criteria are dictated by Alaska Housing. If the homebuyer qualifies, Alaska Housing can then offer lower interest rates.
2. New York
30-year fixed term rate: 6.80%
20-year fixed term rate: 6.68%
15-year fixed term rate: 6.23%
Average house price: $449,826
7/1 ARM: 6.67%
New York is regarded as the world’s financial capital as well as one of the wealthiest cities across the globe. As such, one might expect that properties here have gone through the roof; but that is not the case for New York’s housing market. Before the pandemic, it was dominated by homebuyers and real estate investors. After 2020, the housing market turned around completely; the sellers began to outnumber the buyers.
Today, the trajectory for property listings and closed sales is still going downward. On the other hand, the prediction for New York’s average property price is the opposite. House prices are expected to climb.
As for mortgage rates, the numbers are predicted to rise in the coming months. Factors such as economic inflation and high cost of living will cause them to fluctuate uncontrollably. Aspiring homebuyers can then wait until the rates and price stabilize at an ideal amount.
3. Louisiana
30-year fixed term rate: 6.81%
20-year fixed term rate: 6.85%
15-year fixed term rate: 6.36%
Average house price: $200,613
7/1 ARM: 6.75%
Louisiana is third on our list of states with the lowest mortgage rates. Despite having a 30-year fixed term rate lower than the national percentage, Louisiana’s house prices are expected to rise. Still, home buyers and home sellers alike can use this to their advantage.
For the home buyers, deciding to purchase a property as soon as possible may be the right course of action. This is because the average house price may continue to increase despite remaining significantly lower than the national average. Most importantly, the mortgage rates are lower than in most states.
For the home sellers, they can wait a bit longer until the average property price increases to their desired amount.
4. Maine
30-year fixed term rate: 6.88%
20-year fixed term rate: 6.55%
15-year fixed term rate: 6.34%
Average house price: $389,848
7/1 ARM: 6.16%
Next on our list is the state of Maine, where the mortgage rates are influenced by the increasing number of properties to be sold, and vice versa. In other words, Maine’s housing market has increased its real estate inventory. What does this signify for home buyers? An expanded inventory offers homebuyers a wider range of choices and has the potential to reduce market competition.
For the home sellers in Maine, setting your desired price for a house due to extremely limited inventory is a thing of the past. With the increasing availability of property inventory, home sellers must competitively price their homes to maximize their potential earnings.
This is also good news for investors since the active movement within the market is a positive sign for new investment. Even then, the rise and fall of mortgage rates will still be the primary indicator for all the key players in Maine’s housing market.
5. Oregon
30-year fixed term rate: 6.89%
20-year fixed term rate: 6.61%
15-year fixed term rate: 6.28%
Average house price: $494,577
7/1 ARM: 7.56%
Closing in at no. 5 is the state of Oregon. Its largest city, Portland, is Oregon’s crown jewel when it comes to house buyers. The state is known for its wineries and vineyards. Property hunters are also attracted by Oregon’s natural tourist spots such as the Crater Lake National Park, Mount Hood, and Multnomah Falls, among others.
While the average house price in Oregon is above the national average, the mortgage rates are slightly lower.
6. Michigan
30-year fixed term rate: 6.90%
20-year fixed term rate: 6.78%
15-year fixed term rate: 6.29%
Average house price: $237,918
7/1 ARM: 6.56%
In Michigan, different mortgage options and assistance programs make homeownership more affordable.
For first-time buyers and those who have never owned property in three years, the Michigan State Housing Development Authority (MSHDA) can provide aid. The MSHDA introduces them to mortgage lenders that offer mortgage programs with low rates.
7. Montana
30-year fixed term rate: 6.90%
20-year fixed term rate: 6.56%
15-year fixed term rate: 6.20%
Average house price: $454,414
7/1 ARM: -
Mortgage rates lower than the national average made several homeowners and home buyers choose to purchase a home in Montana. Aside from that, the state is also filled with natural landmarks and picturesque mountains.
On the southern part of Montana, mountain ranges like the Madison Range, Gallatin Range, Gravelly Range, Beartooth Mountains, and Absaroka Mountains surround the area. Obviously, the combination of breathtaking views and low mortgage rates makes Montana a sought-after state for property hunters.
8. Mississippi
30-year fixed term rate: 6.91%
20-year fixed term rate: 6.37%
15-year fixed term rate: 6.22%
Average house price: $177,536
7/1 ARM: 6.91%
The state of Mississippi has the lowest average house price on this list despite being in the eighth position in terms of 30-year fixed term rate mortgage. In addition, Mississippi residents and home buyers alike face skyrocketing home insurance premiums.
Despite that, Mississippi still attracts property hunters because of the many mortgage programs that the state offers. Examples are conventional mortgages, Federal Housing Administration (FHA) loans, and Mississippi Home Corporation’s Smart6 loan.
9. New Jersey
30-year fixed term rate: 6.91%
20-year fixed term rate: 6.78%
15-year fixed term rate: 6.20%
Average house price: $492,394
7/1 ARM: 6.44%
Following at no. 9 among states with the lowest mortgage rates is New Jersey, another popular state for home buyers and property investors. The average house price in this state is at an all-time high. In spite of that, New Jersey’s housing market stays active due to the variety of loans offered in this state.
The best example is the New Jersey Housing and Mortgage Finance Agency (NJHMFA). They offer mortgage programs that are not just from an NJHMFA lender but also government-insured.
10. Arkansas
30-year fixed term rate: 6.92%
20-year fixed term rate: 6.78%
15-year fixed term rate: 6.17%
Average house price: $198,746
7/1 ARM: 6.63%
Arkansas has a significantly lower average house price than the national average despite being the last on our list. Mortgage lenders offer jumbo loans, conventional loans, FHA Loans, and other mortgage products for prospective home buyers.
Here is a summary of the top ten states with the lowest mortgage rates in the US:
|
State |
30-year fixed rate |
20-year fixed rate |
15-year fixed rate |
7/1 ARM |
Average house price |
|
1. Alaska |
6.34% |
- |
6.13% |
- |
$357,535 |
|
2. New York |
6.80% |
6.68% |
6.23% |
6.67% |
$449,826 |
|
3. Louisiana |
6.81% |
6.85% |
6.36% |
6.75% |
$200,613 |
|
4. Maine |
6.88% |
6.55% |
6.34% |
6.16% |
$389,848 |
|
5. Oregon |
6.89% |
6.61% |
6.28% |
7.56% |
$494,577 |
|
6. Michigan |
6.90% |
6.78% |
6.29% |
6.56% |
$237,918 |
|
7. Montana |
6.90% |
6.56% |
6.20% |
- |
$454,414 |
|
8. Mississippi |
6.91% |
6.37% |
6.22% |
6.91% |
$177,536 |
|
9. New Jersey |
6.91% |
6.78% |
6.20% |
6.44% |
$492,394 |
|
10. Arkansas |
6.92% |
6.78% |
6.17% |
6.63% |
$198,746 |
National average home mortgage rates in the US
Now that you know which states have the lowest mortgage rates, it is equally important to know the national average home mortgage rates. Below are figures for 30-year fixed term, 20-year fixed term, 15-year fixed term and 7/1 ARM mortgage rates which you can use to compare with the mortgage rates above:
|
Type of mortgage |
Average rate as of April 2024 |
|
30-year fixed term mortgage |
7.00% |
|
20-year fixed term mortgage |
6.73% |
|
15-year fixed term mortgage |
6.25% |
|
7/1 ARM |
7.63% |
Aside from Business Insider, we also used data provided by Bankrate.
Mortgage rates fluctuations
Like most countries, the fluctuations of mortgage rates in the US are unpredictable and nonstop. These volatile movements are recorded not just yearly but monthly, weekly, daily, or even hourly at times.
This is why it is important to be constantly updated about your chosen state’s mortgage rates as well as the national mortgage rates if you are a property buyer, seller, or investor.
To know more about the mortgage market, check out our market updates page.
Do you live in one of the states with the lowest mortgage rates? Share your home purchase experience with us in the comments section
