| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.365% | 6.469% |
| 15-year fixed | 6.302% | 6.486% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | 6.25% | 7.246% |
Are you preparing to buy a home in the Keystone State? The process can be exciting but complicated if you’ve never been through it before. One of the most confusing parts of buying a home is understanding your mortgage rate. Benzinga will walk you through what you need to know about mortgage rates so you can find the best mortgage company in Pennsylvania.
The Best Mortgage Lenders in Pennsylvania for Rates:
- Best Overall in Pennsylvania: Rocket Mortgage®
- Best for Face-to-Face Experience: Bank of America
- Best for First Time Home Buyers: Vylla
- Best for Low-Income Borrowers: PNC
- Best for Online Purchasing: guaranteed Rate
- Best for Self-Employed: Luxury Mortgage
- Best for VA Loans: Veterans United
What is a Mortgage Rate?
Your mortgage rate is the rate of interest you’ll pay on your loan. When you take out a mortgage for $200,000, for instance, you’ll pay back not only the principal amount (the $250,000 you borrowed) but also the interest, which is based on your specific mortgage rate.
Locking in a low mortgage rate can save you tens of thousands in interest during the lifetime of your home loan. How can you secure the lowest rate possible? Let’s look at how lenders determine your individual mortgage rate to start answering this question.
What Factors Impact Your Mortgage Rate?
You can easily find average mortgage rates based on your location, lender or type of mortgage, but there are a few individual factors you need to understand. Let’s take a look at the most common factors lenders use to set your mortgage rate, so you can work on improving areas if you need to:
Credit Score
Your credit score is probably the most important factor in determining your mortgage rate. The higher your score, the more likely you are to lock in a low mortgage rate. It’s a good idea to work on improving your credit before applying for a home loan.
Loan-to-Value (LTV) Ratio
Your home’s LTV is another major factor used to set your mortgage rate. LTV refers to how much you’ve borrowed compared to your home’s value.
If your home costs $200,000, for instance, and you put $15,000 down on it, you would need financing for the remaining $185,000. Your LTV can be found by dividing the amount financed ($185,000) by the home value ($200,000). In this case, your LTV would be 0.925 or 92.5%. The higher your LTV percentage is, the riskier your mortgage and the higher your mortgage rate. It’s a good idea to put down a larger down payment to help secure a lower rate.
Home Location
Location also plays a large role in determining your mortgage rate. Local real estate markets vary greatly from state to state and city to city. The health of your local market helps determine if rates are currently high or low.
Lender
Your lender also impacts your mortgage rate. Some lenders help you lock in lower rates by considering alternative credit history (rent and utility payments), helping you secure a lower rate than you could with traditional lenders.
Mortgage Type and Term
Your mortgage type is the last major factor that determines your rate. Some rates are mandated by the government and other mortgage types offer incentives and reductions in rates. Your mortgage term, or loan length, can also impact your rate.
Let’s learn more about mortgage types and how they affect your rate.
What Is a Mortgage Type?
There are many mortgage options to choose from to finance your Pennsylvania home. The 4 most common mortgages are conventional, FHA, USDA and VA loans.
Conventional Loans
Conventional home loans are financed by traditional financial institutions like banks and credit unions. Conventional mortgages reflect rates based on your risk as a borrower, your credit score and LTV. These mortgages tend to have higher rates since they’re backed by private banks and not the federal government.
FHA Loans
FHA home loans are financed through the Federal Housing Administration and are geared toward first-time home buyers. You’ll find FHA loans available through a variety of lenders. They’re considered less risky since they’re backed by the government.
FHA home loans have incentives including low down payment requirements (3.5% minimum), low credit score minimums (580–620) and lower interest rates than most conventional mortgages. You will need to purchase private mortgage insurance (PMI) if your down payment is less than 20% to protect the lender in case you default on your loan.
USDA Loans
USDA home loans are financed through the U.S. Department of Agriculture for homes purchased in rural locations. Most homes located outside of major cities qualify for USDA loans.
USDA home loans have incentives including no down payment options (0% minimum), flexible credit score requirements, below-market mortgage rates, and low mortgage insurance rates. You’ll need to purchase PMI if your down payment is less than 20% to protect the lender in case you default on your loan.
VA Loans
VA home loans are great options for former or active members of the military and their families. Financed through the Department of Veterans Affairs, these home loans help qualified applicants comfortably afford to buy a home.
VA home loans have incentives including no down payment (0% minimum) or mortgage insurance requirements, flexible credit requirements and below-market mortgage rates. Although mortgage insurance is not mandated, you’ll need to pay an origination fee to cover loan processing expenses, typically 1% of your loan’s value.
What Is a Mortgage Term?
The duration or length of your home loan is called your mortgage term. Your loan term can impact your mortgage rate. Let’s look at a few common mortgage terms to see how rates can be impacted.
30-Year Fixed
The 30-year fixed-rate mortgage refers to a home loan where you’ll pay a set rate for a term of 30 years. This is the most popular mortgage term you’ll find because it offers a lower monthly payment at a higher interest rate. Your low monthly payment makes this option more affordable month to month, although you’ll ultimately pay more interest than with other mortgage terms.
15-Year Fixed
The 15-year fixed-rate mortgage is the other standard home loan term, which indicates you’ll pay a set price over 15 years. This mortgage term often has higher monthly payments but lower interest rates since you’re paying over a shorter period of time.
5/1 Adjustable Rate
The 5/1 adjustable-rate mortgage (ARM) is a mortgage with a changing rate. You’ll often get approved for ARMs at lower rates, but the rate is only guaranteed for an introductory period. The 5/1 ARM locks in your initial rate for 5 years, after which your rate will change based on the local market.
The 5/1 ARM may seem riskier, but it can be a good option if you secure a low rate and plan on selling your home after 5 years. It’s also good for young homebuyers expecting to make more money after the introductory rate period ends.
Current Mortgage Rates in Pennsylvania
Mortgage rates in Pennsylvania fluctuate based on local housing markets. Benzinga updates our mortgage rate data often to keep up with local or statewide changes in housing supply or demand in Pennsylvania.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.365% | 6.469% |
| 15-year fixed | 6.302% | 6.486% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | 6.25% | 7.246% |
Calculating Interest in Pennsylvania
The interest on your Pennsylvania mortgage is determined based on your home’s value, the type of loan (fixed or adjustable), the loan term and your mortgage or interest rate. Benzinga has compiled the average interest rates on homes in major cities across the state to give you a better idea of how much interest you can expect to pay.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Pittsburgh | $146,600 | 30-year fixed | 6.294% | $29,320 | $725.47 | $143,889.20 |
| Allentown | $137,100 | 30-year fixed | 6.294% | $27,420 | $678.46 | $134,565.60 |
| Reading | $62,000 | 30-year fixed | 0% | $12,400 | $0.00 | -$49,600.00 |
| Scranton | $71,100 | 30-year fixed | 0% | $14,220 | $0.00 | -$56,880.00 |
Lender Credit Score Minimums in Pennsylvania
Your lender will use your credit score to help set your mortgage rate. Here’s a quick list of 5 top lenders in Pennsylvania and their minimum credit score requirements.
| Lender | Minimum Credit Score Required |
|---|---|
| Quicken Loans® | 620 |
| PNC Financial Services | 700 |
| CitiBank | 620 |
| Bank of America | 620 |
| Ally | N/A (no minimum requirement) |
7 Best Mortgage Lenders in Pennsylvania
Now that you understand how mortgage rates work, it’s time to find the right lender for you. To help, we’ve compiled 7 of the most popular mortgage lenders in the Keystone State and grouped them into 7 categories, so you can find the lender best suited to your mortgage needs.
- Online Mortgages
1. Best Overall: Rocket Mortgage®
Rocket Mortgage®, owned by Quicken Loans, is a great choice for your mortgage if you’re looking for fast processing time, low down payment requirements, 24/7 dedicated customer service support and a variety of mortgage options.
Rocket Mortgage® offers conventional, FHA, USDA and VA loans and has a minimum credit score requirement of 620.
- Broad Range of Mortgage Loans
2. Best for Face-to-Face Experience: Bank of America
If you’re looking for a physical bank to walk you through the mortgage process, you might turn to Bank of America.
With a flexible mortgage application — apply fully in-bank or online — Bank of America walks you through every step of the process.
Bank of America offers conventional, FHA and VA loans and has a minimum credit score requirement of 620.
3. Best for First Time Home Buyers: Vylla
Vylla is ideal if you’re buying your first home or facing a credit problem.
That’s because Vylla offers a large selection of mortgages with low down payment and credit score requirements.
Vylla provides conventional, FHA, USDA and VA loans and has a minimum credit score requirement of 620 (alternate credit considered).
4. Best for Low-Income Borrowers: PNC
PNC is a great choice for low-income borrowers because it offers a large variety of loan products, including some with low down payment options and no mortgage insurance requirements.
You can start your application in-branch or online.
PNC offers conventional, FHA, USDA and VA loans and has a minimum credit score requirement of 620 (alternate credit considered).
- Personalized support
5. Best for Online Purchasing: guaranteed Rate
If a quick, no-frills application process is what you’re after, you might be interested in guaranteed Rate.
With high customer ratings and a large selection of mortgages, you’ll get your application in and processed — quickly. Guaranteed Rate offers conventional, USDA and VA loans and requires a minimum credit score of 620.
Want a quick quote? Get a custom refinance quote or purchase quote for your Pennsylvania home.
- Self-employed Borrowers
6. Luxury Mortgage: Best for Self-Employed
Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It's also easier to get approved if you're self-employed. Tax returns are not required and you'll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
- Current Service Members
7. Veterans United: Best for VA Loans
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
Key Considerations
Your mortgage rate determines how much interest you’ll pay over the lifetime of your home loan. While locking in a low rate can save you thousands, it’s not the only factor to consider when shopping for a lender in Pennsylvania. Consider what factors are most important to you: low down payments, alternative credit reviews or no mortgage insurance options when choosing your lender.
Finding the Best Mortgage Rates in Pennsylvania
Finding the best mortgage rates in Pennsylvania is crucial for individuals and families looking to purchase a home or refinance their existing mortgage.
By securing a low interest rate, you can save significant amounts of money over the life of your loan. Comparing rates from various lenders, considering different loan options, and working with a trusted mortgage broker can all contribute to finding the best mortgage rates in Pennsylvania. It is essential to carefully evaluate the terms and conditions of each loan opportunity and consider factors such as the loan's interest rate, repayment period, and associated fees.
By conducting thorough research and understanding the mortgage market, you can make informed decisions and secure the most favorable mortgage rates in Pennsylvania.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.