Rate Factors & Pricing Adjustments

Understanding how lenders price self-employed mortgages and what affects your rate

Self-employed mortgage rates aren’t one-size-fits-all. Lenders start with a base rate and apply adjustments based on your specific risk profile. Understanding these factors helps you anticipate your rate and identify ways to improve it.

How Pricing Works

Lenders begin with a base rate for their self-employed mortgage program, then add or subtract adjustments for various risk factors. These adjustments are typically expressed in percentage points or basis points (0.01%).

Example rate build-up:

Factor	Adjustment
Base rate	7.00%
Credit score (680)	+0.50%
LTV (85%)	+0.25%
Investment property	+0.50%
Loan amount ($1.2M)	+0.25%
Final rate	8.50%

Common Pricing Adjustments

Credit score:

Score Range	Typical Adjustment
760+	-0.25% to 0%
720-759	0%
700-719	+0.25%
680-699	+0.50%
660-679	+0.75% to +1.00%
620-659	+1.00% to +1.50%

Loan-to-value:

LTV	Typical Adjustment
70% or below	-0.25%
75%	0%
80%	+0.125%
85%	+0.25%
90%	+0.50%

Occupancy type:

Type	Typical Adjustment
Primary residence	0%
Second home	+0.25%
Investment property	+0.50% to +0.75%

Loan amount:

Amount	Typical Adjustment
Under $1M	0%
$1M - $1.5M	+0.125% to +0.25%
$1.5M - $2M	+0.25% to +0.50%
Over $2M	+0.50%+

Other Factors That Affect Pricing

• Property type — Non-warrantable condos, 2-4 units, and mixed-use may add 0.25-0.50%
• Interest-only — Typically adds 0.25-0.50%
• Cash-out refinance — Adds 0.25-0.50% versus purchase or rate/term refinance
• Self-employed tenure — Less than 2 years may add to rate or limit availability

Improving Your Rate

Factors you can control before applying:

• Increase credit score by paying down balances
• Make a larger down payment to reduce LTV
• Pay discount points to buy down the rate (typically 1 point = 0.25% rate reduction)

Factors to shop for:

• Compare base rates across lenders
• Find lenders with favorable adjustments for your profile
• Look for promotional pricing or relationship discounts