States With Lowest Mortgage Rates Today – May, 20 2025

Looking for the best mortgage rates today? As of May 20, 2025, the states boasting the lowest 30-year new purchase mortgage rates are New York, California, New Jersey, Florida, Tennessee, Georgia, Pennsylvania, Texas, and Utah, with average rates hovering between 6.84% and 7.05%. But before you pack your bags and move, let's dive deeper into what this means for you and how to snag the best deal.

States With Lowest Mortgage Rates Today – May, 20 2025

Understanding Today's Mortgage Rate Scene

It's May 20th, 2025, and the mortgage market is still a bit of a rollercoaster. National averages for 30-year fixed-rate mortgages are sitting around 7.07%, which is a slight increase from recent weeks. We saw a dip down to 6.50% earlier in the year, but rates have been bouncing around quite a bit. It is always important to keep in mind that rates change frequently and are affected by several factors.

On the flip side, if you are in Alaska, West Virginia, Vermont, Iowa, South Carolina, or Wisconsin, you might find yourself paying a premium, with rates ranging from 7.12% to 7.25%.

Why Do Mortgage Rates Vary So Much by State?

You might be wondering, “Why the heck are mortgage rates so different from one state to another?” Good question! Several factors are at play.

• Lender Presence: Not all lenders operate in every state. Some focus on specific regions, which can affect competition and, therefore, rates.
• State-Level Regulations: Each state has its own set of rules and regulations regarding mortgages, which can impact the cost of doing business for lenders and influence the rates they offer.
• Credit Scores and Loan Sizes: The average credit score and loan size can vary significantly from state to state. Lenders assess risk based on these factors, and higher-risk areas might see higher rates.
• Risk Management Strategies: Lenders have different approaches to managing risk. Some might be more aggressive in offering lower rates to attract borrowers, while others might be more conservative.

National Mortgage Rate Averages (May 20, 2025)

Here’s a quick snapshot of national average mortgage rates for various loan types (Zillow):

Loan Type	New Purchase Rate
30-Year Fixed	7.07%
FHA 30-Year Fixed	7.37%
15-Year Fixed	6.09%
Jumbo 30-Year Fixed	7.06%
5/6 ARM	7.22%

Don't Fall for the “Teaser” Rate Trap!

You know those super-low mortgage rates you see advertised online? Be careful! These are often teaser rates that come with strings attached. They might require you to pay points upfront, have an ultra-high credit score, or take out a smaller-than-typical loan.

How to Get the Best Mortgage Rate in Your State

Alright, let's get down to brass tacks. Here's how you can increase your chances of securing the best mortgage rate, no matter where you live:

1. Shop Around: I cannot stress this enough. Get quotes from multiple lenders. Don't just settle for the first offer you receive.
2. Improve Your Credit Score: A higher credit score translates to a lower interest rate. Pay your bills on time, reduce your debt, and check your credit report for errors.
3. Save for a Larger Down Payment: A larger down payment reduces the lender's risk, which can lead to a better interest rate. Plus, you'll borrow less money overall.
4. Consider a Shorter Loan Term: A 15-year mortgage will have lower rates and you will save money on interest!

Understanding What Impacts Mortgage Rates

Mortgage rates are a complicated beast, influenced by a range of factors. Understanding these influences can help you anticipate rate movements and make informed decisions. Here are some key drivers:

• Bond Market Performance: Mortgage rates often track the yields of 10-year Treasury bonds. When bond yields rise, mortgage rates tend to follow suit, and vice versa.
• Federal Reserve Policy: The Federal Reserve's actions, particularly its monetary policy, play a crucial role. The Fed influences rates, which in turn, impacts mortgage rates.
• Competition Among Lenders: The level of competition between mortgage lenders can affect rates. In a highly competitive market, lenders may offer lower rates to attract borrowers.
• Economic Conditions: The overall health of the economy impacts mortgage rates. Strong economic growth can lead to higher rates as demand for borrowing increases.

The Fed's Recent Moves: A Quick Recap

The Federal Reserve's actions have had a significant impact on mortgage rates over the past few years. Here's a quick overview:

• Pandemic Response: In response to the pandemic, the Fed implemented policies to keep interest rates low, including purchasing bonds.
• Rate Hikes to Combat Inflation: Faced with rising inflation, the Fed aggressively raised interest rates to cool down the economy.
• Potential Rate Cuts on the Horizon: As of May 2025, the Fed has held rates steady, after several rate cuts towards the end of last year.

How Much Will Your Mortgage Cost?

Before you jump into the home-buying process, it's crucial to understand how much your monthly mortgage payment will be. Here are the key factors that determine your payment:

• Home Price: The more expensive the home, the higher your mortgage payment will be.
• Down Payment: A larger down payment reduces the amount you need to borrow, lowering your monthly payment.
• Loan Term: The longer the loan term, the lower your monthly payment will be, but you'll pay more interest over the life of the loan.
• Interest Rate: The interest rate significantly impacts your monthly payment. Even a small difference in the interest rate can save you thousands of dollars over the life of the loan.
• Property Taxes: Property taxes are typically included in your monthly mortgage payment.
• Homeowners Insurance: Homeowners insurance protects your home and is also included in your monthly payment.

Example:

Let's say you're buying a home for $440,000 and putting down $88,000 (20%). With a 30-year loan at a 6.67% interest rate, your estimated monthly payment would be around $2,649.04 (including principal, interest, property taxes, and homeowners insurance).

• Principal & Interest: $2,264.38
• Property Taxes: $256.67
• Homeowners Insurance: $128.00
• Mortgage Size: $352,000.00
• Mortgage Interest: $463,176.16*
• Total Mortgage Paid: $815,176.16*

Assuming a fixed interest rate.

Summary:

The mortgage market is constantly evolving, and staying informed is key to making smart financial decisions. While the states with the lowest mortgage rates might seem tempting, remember to consider your overall financial situation and long-term goals.

I hope this guide has given you a clearer understanding of today's mortgage rate scene and empowered you to make informed choices. Happy house hunting!