The 30-Year Fixed Is Not the Only Option: Choosing a Loan Product at 7%

When money was cheap, the loan product barely mattered. Almost everyone took the 30-year fixed, and the spread between that and everything else was too small to bother arguing about. That is no longer the market we are in. Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed-rate mortgage at 7.03% for the week ending September 24, 2026, up from 6.95% the prior week and 6.30% a year earlier, with the 15-year fixed at 6.42%. In the Mortgage Bankers Association weekly survey for the week ending September 18, the average contract rate on a 5/1 ARM was 6.10%, more than a full percentage point below the 30-year fixed. A gap that wide is not a rounding error. On a $500,000 loan it is worth roughly $305 a month in principal and interest. The product you choose now moves your payment more than another $25,000 of purchase price does.

Buyers have noticed. The ARM share of mortgage applications rose to 9.8% in that same MBA week, up from 8.4% a week earlier, while the Refinance Index sat 62% below its year ago level and ran at its slowest pace since February 2025. That combination tells you something honest about where the market's head is. Fewer people are betting on a quick refinance, and more are willing to take a variable rate to get a payment that works today. But an ARM is a trade, not a discount. You are accepting rate risk after the fixed period ends in exchange for a lower payment during it. That trade is reasonable if you have a concrete reason to think you will sell or refinance inside the fixed window, such as a relocation you can name, a career move already in motion, or a starter home you have always treated as a five year stop. It is not reasonable as a way to afford a house you otherwise cannot, because the adjustment will find you.

The fixed-rate side has its own choices. A 15-year at 6.42% saves an enormous amount of interest but raises the monthly payment substantially, which is why it tends to suit refinancers and move up buyers with equity more than first-time buyers. Points are the other lever, and they deserve arithmetic rather than instinct. Ask your lender for the cost of each discount point, the exact rate it buys, and the resulting payment, then divide the cost by the monthly savings to get your break even in months. If you expect to be in the loan well past that break even, points can be the cheapest money in the deal. If you do not, they are prepaid interest you will never recover. A seller funded temporary buydown, like a 2-1, is a different animal again. It lowers the payment for the first two years only, and the underlying note rate is still the one you will live with in year three.

Loan limits shape the choice before you even get to the rate. FHFA set the 2026 baseline conforming loan limit at $832,750 for one-unit properties, up 3.26% from $806,500, with a high cost area ceiling of $1,249,125. Several counties in Massachusetts and Connecticut sit above the baseline, which means a purchase that would be a jumbo elsewhere may still be conforming here. That matters because conforming loans generally price better and underwrite more predictably than jumbos. So before you fall in love with a product, have your lender run the same purchase three ways, as a 30-year fixed, a 15-year fixed, and an ARM, at today's actual rates, with and without points, and ask specifically whether the loan amount clears the conforming limit in that county. The right loan product is not the one with the lowest number on the sheet. It is the one whose worst realistic outcome you can still live with.

Frequently asked questions

What are mortgage rates right now?

Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed-rate mortgage at 7.03% and the 15-year fixed at 6.42% for the week ending September 24, 2026. A week earlier the 30-year averaged 6.95%. A year earlier it was 6.30%. The Mortgage Bankers Association survey for the week ending September 18 showed an average 5/1 ARM rate of 6.10%. Your own quoted rate depends on credit score, down payment, loan type, property type and lender pricing.

Is an adjustable-rate mortgage a good idea in 2026?

It depends on how long you will hold the loan. With the 5/1 ARM averaging 6.10% against a 7.03% 30-year fixed, an ARM meaningfully lowers the payment during the fixed period. That trade makes sense when you have a specific reason to expect to sell or refinance before the first adjustment. It does not make sense as a way to stretch into a house you could not otherwise carry, because the rate can reset higher.

How many buyers are using ARMs?

The adjustable-rate share of mortgage applications was 9.8% in the Mortgage Bankers Association weekly survey for the week ending September 18, 2026, up from 8.4% the week before.

Should I take a 15-year mortgage instead of a 30-year?

A 15-year fixed averaged 6.42% versus 7.03% for the 30-year in the week ending September 24, 2026, and it retires the loan in half the time, so total interest paid is far lower. The tradeoff is a substantially higher monthly payment with no option to drop back down. It tends to fit refinancers and move up buyers with equity better than first-time buyers who need payment flexibility.

Are mortgage points worth buying?

Calculate the break even. Divide what the points cost by the monthly payment savings they produce. The result is how many months you must keep the loan to come out ahead. If you confidently expect to stay past that point, points can be worthwhile. If you may sell or refinance sooner, they are prepaid interest you will not recover.

What is the difference between a permanent buydown and a 2-1 buydown?

Discount points permanently lower the note rate for the life of the loan. A 2-1 buydown, usually funded by the seller or builder, lowers the effective rate by about two percentage points in year one and one point in year two, then the payment steps up to the full note rate in year three. Qualify yourself on the full note rate, not the introductory payment.

What is the conforming loan limit for 2026?

The Federal Housing Finance Agency set the 2026 baseline conforming loan limit at $832,750 for one-unit properties, a 3.26% increase from $806,500 in 2025, with a ceiling of $1,249,125 in designated high cost areas. A number of Massachusetts and Connecticut counties carry limits above the baseline, so check the county before assuming a loan is jumbo.

Why does the conforming loan limit matter to a buyer?

Loans at or under the applicable conforming limit can be sold to Fannie Mae and Freddie Mac, which generally means better pricing and more standardized underwriting than a jumbo loan. Staying under the limit, sometimes by adjusting the down payment slightly, can lower the rate on the same purchase.

What questions should I ask a lender about loan products?

Ask for the same purchase priced three ways, as a 30-year fixed, a 15-year fixed, and an ARM, at today's rates rather than anticipated rates. For each, ask for the total monthly payment including taxes, insurance and mortgage insurance, the cost and break even of any points, whether the loan amount clears the conforming limit in that county, and, for an ARM, the index, the margin, the first adjustment date and the periodic and lifetime caps.

Sources

• Freddie Mac Primary Mortgage Market Survey, week ending September 24, 2026
• Mortgage Bankers Association Weekly Applications Survey, week ending September 18, 2026
• Federal Housing Finance Agency, 2026 conforming loan limit values
• National Association of REALTORS, Existing-Home Sales, August 2026

The $305 per month figure above is an illustrative calculation from the cited rates on a $500,000 loan, not a quoted statistic.