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  • Writer's pictureRebecca Richardson - Mortgage Consultant

How Your Credit Score Impacts Your Interest Rate and PMI

Your credit score is one of the most important parts of your loan application.

Specifically, it can make a big impact on your mortgage interest rate and PMI - private mortgage interest.

So let’s talk about how it can affect both of these numbers as you move forward on your home buying journey.

Let’s say you’re buying a home using a conventional loan, for a primary home, with a 5% down payment.

● If your score is 741 or higher, you’re getting the best terms for your scenario. So for a $300K loan amount, your interest rate may be 3% with a principal and interest payment of $1,265.

● With a 700 credit score, the rate would be 3.25% with a $1,306 payment.

● With a 660 credit score, the rate would be 3.5% with a $1,347 payment.

Now, let’s talk about PMI.

If you’re putting less than 20% down and have a conventional loan, chances are you’ll have to pay for PMI.

But, how is it calculated?

There are two major factors that impact PMI:

Your down payment percentage

Your credit score

PMI is calculated based on your down payment percentages meaning the factor that’s used to calculate it is less if you put 10% down versus 3% down.

It’s also affected by your credit score.

Let’s look at the following scenarios for a $300K loan.

Borrower 1 puts 3% down and has a 740 credit score. They pay $125/month for their PMI.

Borrower 2 puts 10% down and has a 680 credit score. They pay $115/month for their PMI.


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