Mortgage rates have dropped to their lowest level in over three years. As of 2026, the 30-year fixed rate sits at approximately 6.06% to 6.24%. The conforming loan limit has also gone up to $832,750, giving more buyers access to loans backed by government agencies.
But here's the thing: choosing the right mortgage type still matters more than timing the market perfectly. The difference between a 15-year and 30-year fixed rate, or between conventional and government-backed options, can translate to tens of thousands of dollars over the life of your loan. This guide breaks down every major mortgage type, compares their true costs side by side, and walks you through what Texas buyers specifically need to know.
Before diving into specific loan products, it helps to understand how mortgage rates are actually determined. This explains why certain loans cost more than others and when market conditions favor different strategies.
Mortgage rates don't move in step with the Federal Reserve's Federal Funds Rate. Instead, the 30-year fixed rate closely follows the 10-Year U.S. Treasury yield. Why? Because the average mortgage lasts about 7 to 10 years (because people refinance, move, or pay it off), which makes the 10-Year Treasury a good comparison point.
• The "spread" between Treasury yields and mortgage rates is usually about 170 basis points (1.7%)
• In 2026, this gap is still higher than normal because of ups and downs in the bond market and the Fed cutting back on mortgage-backed securities
• Even when Treasury yields hold steady, mortgage rates may not drop because lenders add extra charges to cover their risk
The following table shows 2026 national average rates across all major loan products. Pay close attention to the APR column, which shows your true borrowing cost including fees and mortgage insurance.
| Loan Product | Interest Rate | APR | Market Trend |
|---|---|---|---|
| 30-Year Fixed (Conventional) | 6.06% - 6.29% | 6.24% - 6.33% | Stable / Slight Rise |
| 20-Year Fixed | 5.89% | 5.95% | Stable |
| 15-Year Fixed | 5.38% - 5.49% | 5.69% - 5.79% | Stable |
| 30-Year FHA | 5.75% - 6.18% | 6.23%+ | Lower Rate / Higher APR (MIP) |
| 30-Year VA | 5.375% - 5.77% | 5.50% - 6.52% | Lowest Available Rates |
| 30-Year Jumbo | 5.625% - 6.39% | 6.44% | At Parity or Below Conforming |
| 5/6 SOFR ARM | 5.625% - 6.00% | 6.30% | Inverted (No Discount) |
Two unusual things are happening in the 2026 market. First, adjustable-rate mortgages currently cost as much or more than fixed rates, which takes away their usual advantage. Second, jumbo loan rates are now lower than regular conforming rates in many cases, which is the opposite of what normally happens and is good news for people borrowing larger amounts.
The rates above reflect national averages across all lender types. But not all lenders price the same way. Federal credit unions like PrimeWay consistently offer rates 0.10% to 0.37% below traditional bank averages because they are owned by their members and don't need to make profits for outside investors. That difference adds up fast over the life of a mortgage.
When comparing typical bank mortgage rates to PrimeWay's, the potential savings are clear. On a $400,000 loan, choosing PrimeWay could save you tens of thousands over the life of your loan:
These estimates are based on average market comparisons and assume full loan terms. Actual savings will vary depending on your credit, down payment, and the rate you lock in at the time of approval.
PrimeWay Advantage
One thing worth noting: not every lender charges the same rate for the same loan. Federal credit unions like PrimeWay typically price 0.10% to 0.37% below traditional bank averages because they're member-owned and don't need to generate profits for outside shareholders. On a $350,000 mortgage, that translates to roughly $22,000 to $46,000 in savings over 30 years. Same loan, same house, different lender.
The Federal Housing Finance Agency (FHFA) updates conforming loan limits every year based on how home prices have changed. For 2026, the baseline limit increased 3.26% to $832,750. Knowing these limits helps you figure out whether you can get a lower-cost government-backed loan or whether you'll need a jumbo or portfolio loan.
These limits apply to most U.S. counties. Multi-unit properties have higher limits because they can bring in rental income.
| Property Units | 2026 Limit | 2025 Limit | YoY Change |
|---|---|---|---|
| 1-Unit | $832,750 | $806,500 | +3.26% |
| 2-Unit | $1,066,250 | $1,032,650 | +3.25% |
| 3-Unit | $1,288,800 | $1,248,150 | +3.26% |
| 4-Unit | $1,601,750 | $1,551,250 | +3.26% |
In counties where homes cost a lot more than average (where 115% of the local middle home price is above the baseline), the law allows a higher limit, up to 150% of the baseline:
• 1-Unit Ceiling: $1,249,125
• Applies to San Francisco, New York City, Los Angeles, Washington D.C., and areas set by law like Alaska, Hawaii, Guam, and the U.S. Virgin Islands
• Super Conforming loans usually come with rates 0.125% to 0.25% higher than Standard Conforming
Conventional loans are the most common type of mortgage in the U.S. These are "conforming" loans that follow Fannie Mae and Freddie Mac rules, making them easy to buy and sell on the market and generally offering the best rates for borrowers who qualify.
• Minimum Credit Score: 620 (740+ for best pricing)
• Down Payment: 3% for first-time buyers, 5% for repeat buyers, 20% to avoid PMI
• Debt-to-Income (DTI): Usually tops out at 43%, but can go up to 49.9% if you have other strong points (like extra savings or a big down payment)
• Employment: 2-year history in same field preferred
• Reserves: None required for primary residence (2 to 6 months for investment properties)
Your actual rate depends a lot on your credit score because of LLPA fees. Someone with a 640 credit score often pays much more than the advertised rates:
| Credit Score Range | Approximate LLPA | Impact on $400K Loan |
|---|---|---|
| 780+ | 0.00% - 0.25% | $0 - $1,000 in fees |
| 740-779 | 0.25% - 0.50% | $1,000 - $2,000 in fees |
| 700-739 | 0.75% - 1.00% | $3,000 - $4,000 in fees |
| 660-699 | 1.25% - 1.75% | $5,000 - $7,000 in fees |
| 620-659 | 1.75% - 2.50% | $7,000 - $10,000 in fees |
For people with scores below 680, FHA loans often end up costing less overall, even with the required mortgage insurance.
PMI is required on conventional loans when you put less than 20% down. Unlike FHA insurance, PMI is based on your risk level and can be removed:
• High Credit (760+): PMI costs 0.20% to 0.40% annually
• Lower Credit (640-660): PMI costs 1.0% to 1.5% annually
• Drops Off Automatically: When your loan balance reaches 78% of the original home value (required by federal law)
• Early Removal: You can ask to remove it at 80% loan-to-value if you can show your home's value has stayed the same or gone up
The Federal Housing Administration backs loans made by private lenders, making it easier for people with lower credit scores or smaller down payments to get a mortgage. FHA is still the go-to choice for first-time buyers who can't qualify for a conventional loan.
| Property Units | Floor (Low-Cost) | Ceiling (High-Cost) | Calculation |
|---|---|---|---|
| 1-Unit | $541,287 | $1,249,125 | 65% - 150% of CLL |
| 2-Unit | $693,062 | $1,599,375 | 65% - 150% of CLL |
| 3-Unit | $837,720 | $1,933,200 | 65% - 150% of CLL |
| 4-Unit | $1,041,137 | $2,402,625 | 65% - 150% of CLL |
FHA charges two types of insurance to keep its insurance fund running:
• Upfront MIP (UFMIP): 1.75% of the loan amount, usually rolled into your loan balance
• Annual MIP: 0.55% for most borrowers (LTV over 95%, term over 15 years)
• Duration with less than 10% down: Life of loan (never cancels)
• Duration with 10%+ down: Removed after 11 years
| Loan-to-Value | Annual MIP Rate | Duration |
|---|---|---|
| 90% or below | 0.50% | 11 Years |
| 90.01% - 95.00% | 0.50% | Life of Loan |
| Over 95.00% | 0.55% | Life of Loan |
• Flexible on Credit: A 580 score gets you in with 3.5% down; scores from 500 to 579 qualify with 10% down
• Higher Debt Allowed: The automated system can approve debt-to-income ratios up to 56.9%
• Transferable: FHA loans can be passed on to future buyers, which adds value to your home when rates are going up
• Long-Term Plan: Refinance to a Conventional loan once your credit improves and you've built up 20% equity
The VA Home Loan program is the best deal available in the U.S. mortgage market. It offers zero down payment, no monthly mortgage insurance, and usually the lowest rates you can find.
• Wartime Active Duty: 90 consecutive days
• Peacetime Active Duty: 181 consecutive days
• Gulf War Era (1990 to present): 24 continuous months or full period called to active duty
• National Guard/Reserves: 6 creditable years or 90 days active duty
• Surviving Spouses: Of veterans who died in service or from service-connected disabilities
The VA charges a one-time funding fee (which you can roll into your loan) to help cover the program's costs:
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% (Zero Down) | 2.15% | 3.30% |
| 5% - 9.9% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Funding Fee Exemptions (pay 0%): Veterans with 10%+ service-connected disability, surviving spouses, and Purple Heart recipients.
A law change removed loan limits for veterans with Full Entitlement:
• Full Entitlement: If you don't have any active VA loans, you can borrow any amount with zero down (as long as the lender approves it)
• Partial Entitlement: If you already have a VA loan, the 2026 limit of $832,750 is the most you can borrow with zero down
• Above the Limit: You'll need to put 25% down on any amount over the entitlement cap
The USDA Section 502 Guaranteed Loan Program offers 100% financing (no down payment) in qualifying rural and suburban areas for middle-income families.
• Location Rule: Towns with fewer than 35,000 people (many suburban areas qualify)
• Income Limits (2026): $119,850 for 1 to 4 members; $158,250 for 5 to 8 members
• Upfront Guarantee Fee: 1.00% (financeable)
• Annual Fee: 0.35% (significantly lower than FHA's 0.55%)