Cornerstone First Mortgage
Company NMLS #173855
Phone: 216-777-4330
Why Your Mortgage Rate Is Different From the Advertisement You Saw
If you were quoted a higher rate than what you saw advertised, it is not random and not necessarily misleading.
Advertised mortgage rates are based on a very specific, ideal borrower profile. If your situation differs in any way, your rate will change, sometimes significantly.
What the “Advertised Rate” Assumes
Most advertised rates are built on a narrow, optimized scenario:
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Credit score: 740+
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Down payment: 20%
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Property: Primary residence
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Type: Single-family home
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Loan amount: $200,000+
If your profile matches all of these, you may qualify for something close to the advertised rate.
If not, pricing adjustments apply.
The Main Reasons Your Rate Is Higher
1. Credit Score
Credit score is one of the largest pricing factors.
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Example:
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760 score → ~6.5%
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605 score → ~7.125%
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This difference may show up as:
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A higher interest rate
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Higher upfront costs (points)
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Example:
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620 FICO vs. 800 FICO → ~2.5 points more in cost for the same rate
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2. Down Payment (Loan-to-Value)
Your equity directly impacts risk and pricing.
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20% down = baseline
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5–10% down → ~0.5 points worse in cost
Lower down payment = higher perceived risk = higher cost or rate.
3. Property Type
Different property types carry different risk levels.
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Single-family home → baseline
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Condo → ~0.375% higher rate
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Manufactured home → ~0.625% higher rate
Bottom Line
Advertised rates are real, but they apply to a very specific borrower profile.
If your situation differs, which is common, your rate will differ as well.
What matters is understanding:
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Which variables are impacting your pricing
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What trade-offs you are making
Mortgage pricing should be structured strategically, not compared blindly to an advertisement.
Written by Gen Flieger
Loan Originator
Conrad Mortgage
NMLS # 2667206
03/30/2026
4. Occupancy
How you plan to use the property significantly affects pricing.
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Primary residence → best pricing
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Investment property → starts around +3 points in cost or more
If the property is not your primary residence, advertised rates generally do not apply.
5. Loan Purpose
Even with identical borrower profiles:
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Rate-and-term refinance → better pricing
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Cash-out refinance → higher rate
Reason: pulling equity increases lender risk.
6. Loan Type
If you are not using a standard conventional loan:
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Non-QM loans can be ~2% higher in rate or more
Comparing these to conventional advertised rates is not equivalent.
7. Points vs. Rate
Advertised rates often assume you are paying points upfront.
Example scenario (FHA loan, 700 credit score):
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6.625% → 0 points (par rate)
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6.125% → 1 point
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5.875% → 2 points
Lower advertised rates typically assume higher upfront cost.
8. Debt-to-Income Ratio (DTI)
DTI does not always directly change your rate but affects qualification and loan options.
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Conventional:
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Max ~50%
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Preferred under 43%
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FHA:
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Up to ~57%
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Higher DTI can:
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Limit loan options
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Push you into different programs with different pricing and mortgage insurance
Why Ads Don’t Match Your Quote
A mortgage rate is not a single fixed number. It is built from multiple variables:
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Credit score
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Down payment
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Property type
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Occupancy
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Loan purpose
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Loan type
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Market conditions
Even small differences across these factors can create meaningful changes in your rate.
What You Should Focus On Instead
Instead of asking: “Why is my rate higher than the ad?”
Ask: “Is my loan structured correctly for my goals?”
You typically have trade-offs:
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Lower rate → higher upfront cost
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Lower upfront cost → higher rate
The right structure depends on:
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How long you plan to keep the loan
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Cash available at closing
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Monthly payment goals