Mortgage Rates Vary Based on Where You live. Here’s the Top 5 States With the Highest and Lowest Rates

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There’s an often-overlooked element that affects your mortgage rate: Location.

Today’s real estate market, with its rapidly rising home prices, has made it more important to secure the lowest possible mortgage interest rate to help keep your monthly payments affordable. So you’ll want to understand everything that goes into determining your mortgage rate

Right now is still a great time for borrowers. The average 30-year mortgage rate has increased from the record low we saw last year. It hovers around 4% – still a historically low mortgage rate. But what matters is the mortgage rate you end up with, and there’s a lot that goes into determining that rate.

There’s a strong personal component to your mortgage rate, but geographical factors — like the prevalence of lenders, housing prices, and local or state laws — also have an effect.

So when you’re shopping around for a mortgage, these are the factors that determine the mortgage rate you will get. And with location being a major factor, we mapped out the top five most expensive and cheapest states to get a mortgage rate. 

The Top 5 States With the Highest and Lowest Mortgage Rates

When it comes to determining mortgage rates, geographic factors play a role. But they’ll typically have a smaller impact overall. “Rates are not going to be so vastly different state to state … that it should really impact, in any major way, what kind of house you can afford,” says Erin Sykes, Florida and New York-based real estate agent and chief economist with Nest Seekers International. “We’re not talking about two (percentage) points between states.” For borrowers, the rate difference from one state to another would be a fraction of a percentage.  

Here are the states with the highest and lowest rates, compared to the national average rate of 3.84%*.

Top 5 States With the Highest Mortgage Rates*

  1. Alaska – 0.27% higher 
  2. Montana – 0.08% higher 
  3. Utah – 0.07% higher 
  4. North Dakota – 0.07% higher
  5. Louisiana – 0.07% higher

Top 5 States With the Lowest Mortgage Rates*

  1. Massachusetts – 0.14% lower
  2. New York – 0.10% lower
  3. New Jersey – 0.08% lower
  4. North Dakota – 0.05% lower
  5. Connecticut, Nebraska, Hawaii, Florida – 0.04% lower

*This information was compiled by NextAdvisor which is owned by Red Ventures. based on Bankrate data (which is owned by the same parent company) and is up to date as of Feb. 4, 2022.

Other Factors That Influence Your Mortgage Rate 

Other than location, here are the other factors that can influence your mortgage rate.

You’re Personal Finance Profile Is a Big Factor

The rate differences between locations won’t outweigh your personal finances. “You’re never going to fully escape your personal financial situation,” says Sykes. So no matter where you decide to purchase a home, things like increasing your credit score and saving up for a larger down payment will always work in your favor.

However, understanding how competition and home prices influence your mortgage rate will help you be better prepared to shop around and negotiate with mortgage lenders. And finding the best deal is the biggest thing you can do to secure a lower rate in the short-term, according to a report by the California-based fintech startup Haus. “We found that there is a 75 basis point spread (0.75%) across lenders,” says Ralph McLaughlin, chief economist at real estate data firm Kukun, and formerly with Haus. So finding the lender with the lowest rate is important.


Simple supply and demand will play into your mortgage interest rate. “It creates bidding wars when there are a lot of lenders servicing an area,” Sykes says. So purchasing or owning a home where there is an abundance of lenders will work in your favor. 

While the prevalence of online mortgage lenders will help you find and compare offers, regardless of where you live, the presence of physical offices makes a difference. A Haus analysis found that local bank concentration also impacts your interest rate. “There was a pretty strong correlation between the number of brick-and-mortar banks in a market per capita, and mortgage spreads. Markets that had a lot more banks per capita had lower spreads, which means that their rates were lower, all else equal,” McLaughlin says. 

Loan Balance

The size of your mortgage matters, so housing prices in your area can make a difference in your interest rate. “The elephant in the room is loan balance. It costs the same to originate a million-dollar mortgage as it does a $100,000 mortgage, but the million-dollar mortgage is going to make that lender more money,” McLaughlin says.

Mortgages of roughly $350,000 to $500,000 will, on average, have a mortgage rate that’s approximately 0.23% lower than loans with balances of $100,000 or less, according to this Haus study. The difference in rates between the loan balances is “…lenders trying to cover their cost of origination, because cheaper mortgages don’t make them as much money,” McLaughlin says. 

Cost of Doing Business

If a lender has lower fixed costs, then they may have the flexibility to offer lower mortgage rates. “All of the things that make prices increase for anything … will likely impact mortgage rates as well,” Sykes says. So when a bank pays less to keep the lights that should factor in your favor. For example, some online mortgage businesses have less overhead costs, and are able to pass the savings onto the consumer. 

Other things that can increase the cost of doing business for a lender are foreclosure rates and the laws that impact home loans. “The more foreclosures there are in the area the riskier it is for the lender to lend money,” Sykes says. And how long the foreclosure process takes varies widely depending on state law, which is a cost lenders may take into consideration. “States like Connecticut and Florida where your court process can take years, the lenders really have to account for that,” she says.

Why It’s Important to Shop and Compare Lenders 

The single most important thing you can do to secure the lowest mortgage rate is to compare offers from a variety of lenders. Each will evaluate your financial situation differently. Most financial experts recommend comparing at least two to three different quotes to ensure the best rate, fees, and terms for your situation. 

Gather a written Loan Estimate from each lender and use it to compare the interest rate and loan fees. Even a small difference in rates can add up to a significant amount over the duration of the loan. Some lenders may offer a lower interest rate in exchange for additional upfront fees and discount points. To determine if it’s worth paying discount points or taking the lender credits in exchange for a higher rate, consider how long you plan on staying in the home. 

Here is a loan calculator tool to help you compare between lender offers:

Home loan comparison calculator

Compare your payment options side-by-side to see which is right for you and your financial situation.

Find the mortgage that’s best for you by comparing the cost of multiple loans over time.