Once you know how rates work, the next question is which structure to use. Here is a plain description of the main options, without recommendations, since the right choice depends on your plans and a lender can help you compare.
Fixed-rate loans
The interest rate stays the same for the whole term, commonly 30 or 15 years, so principal and interest never change. Taxes and insurance can.
Adjustable-rate loans (ARMs)
The rate is fixed for an initial period, such as five, seven or ten years, and then adjusts periodically based on a market index plus a set margin. Caps limit how much the rate can change at each adjustment and over the life of the loan. Initial rates are often lower than for a comparable fixed loan.
Permanent buydowns (points)
You pay points up front to lower the rate for the life of the loan. The break-even period shows how long it takes for the payment savings to cover the cost. See how to read a Loan Estimate for an example.
Temporary buydowns
A temporary buydown lowers the rate for the first year or two, for example a 2-1 buydown reduces it by two points in year one and one point in year two. The cost is prepaid, often by a seller credit or the builder, and the payment steps up to the full rate afterward.
Seller credits
Some sellers offer a credit toward closing costs or a rate buydown as part of a deal. What it is worth depends on your loan and how long you keep it.
Questions to ask your lender
- What would my payment be at the start and at the highest possible adjustment?
- What is the cost and break-even of buying the rate down?
- Can a seller credit be used this way on my loan type?
Talk to a lender. Rates, loan programs and approvals come from lenders, not from websites or real estate agents. Talk to your own mortgage broker, or use our preferred lender, Rodrigo Ballon with CrossCountry Mortgage, at 858-735-0255. You are always free to choose any lender you like, and you can verify any lender’s license at nmlsconsumeraccess.org.
Where these numbers come from
- Freddie Mac Primary Mortgage Market Survey for weekly average mortgage rates.
- FRED (St. Louis Fed) for the federal funds target range and the 10-year Treasury yield.
- Federal Reserve FOMC calendar for meeting dates and statements.
- Investing.com Fed Rate Monitor, which shows market expectations for upcoming meetings based on federal funds futures, and its Fed Interest Rate Decision calendar.
Data as of Sep 24, 2026. These pages describe the past and the present and make no predictions. Investing.com and the other sources are independent of Rudy Flores and Coldwell Banker West.
More on interest rates
- The Fed's Rate Decisions vs. Mortgage Rates: What Is the Difference? — The Federal Reserve sets one short-term rate. Mortgage rates follow a different set of forces. Here is how the two relate, with the recent decisions.
- The 10-Year Treasury and Mortgage Rates: How They Move Together — Mortgage rates and the 10-year Treasury yield tend to rise and fall together. Here is the gap between them, year by year.
- Interest Rate, APR and Points: How to Read a Loan Estimate — Three numbers show up on every mortgage quote. Here is what each one means, with a worked example.
- What One Point of Interest Rate Means for Your Monthly Payment — A simple table of monthly principal and interest for common loan sizes, from 5% to 8%.
- Mortgage Rates Through the Decades: 1971 to Today — Freddie Mac's weekly survey goes back to 1971. Here are the average, the high and the low for every decade.
General information, not financial advice.