when the federal reserve makes it more expensive for banks to borrow by targeting a higher federal funds rate the banks in turn pass on the higher costs to their customers and consumer loan rates including those for mortgages tend to go up 
typically linked to the interest rate are points or fees paid to the lender or broker the more points you pay the lower your interest rate one point costs 1 of the loan amount and reduces your interest rate by about 0 25 12the final factor in determining the interest rate is the individual borrower s financial profile personal assets creditworthiness and the size of the down payment that they can make on the residence to be financed a buyer who plans on living in a home for 10 or more years should consider paying for points to keep interest rates lower for the life of the mortgage special considerations for a conventional mortgage or loanthese types of loans are not for everyone here s a look at who is likely to qualify for a conventional mortgage and who is not people with established credit and stellar credit reports who are on a solid financial footing usually qualify for conventional mortgages more specifically the ideal candidate should have generally speaking those just starting out in life those with a little more debt than normal and those with a modest credit rating often have trouble qualifying for conventional loans more specifically these mortgages may be tough for those who have however if you re turned down for the mortgage be sure to ask for the reasons in writing you may qualify for other programs that could help you get approved for a mortgage for example if you have no credit history and are a first time homebuyer you may qualify for an fha loan fha loans are tailored specifically for first time homebuyers as a result fha loans have different qualifications and credit requirements including a lower down payment 