Par Rate
The par rate is the base interest rate a lender offers with zero discount points and zero lender credits — it’s the “no extras” price of your mortgage, and it’s the benchmark every other pricing option is measured against.
How Par Rate Fits Into Pricing
Every day, lenders publish rate sheets with multiple options. Below par rate, you pay points to buy down the rate. Above par rate, the lender gives you credits (which can offset closing costs). Par sits right in the middle — no money changes hands for rate adjustments.
The par rate changes daily based on mortgage-backed securities markets, the 10-year Treasury yield, and lender-specific factors. What’s par today might not be par tomorrow.
Dollar Example
Your lender’s rate sheet shows: 6.50% costs 0.75 points ($2,625 on a $350,000 loan), 6.75% is par (zero points, zero credits), and 7.00% comes with 0.50% in lender credits ($1,750 toward your closing costs). The par rate is your baseline for deciding whether to buy down or take credits.
Watch Out
Not every lender will tell you the par rate unless you ask. Some only show you options with points built in, making their rates look lower than they actually are. Always ask: “What’s the rate at zero points and zero credits?” That’s the par rate, and it’s the only honest way to compare lenders side by side.
Also, “par rate” on a rate sheet is different from the par rate a wholesale lender offers brokers. The wholesale par rate is lower (it doesn’t include the broker’s compensation). Don’t compare a broker’s wholesale par to a retail lender’s par — that’s not apples to apples. Use our comparison tool with final consumer-facing rates.
Frequently Asked Questions
Should I take the par rate or buy points?
It depends on how long you’ll keep the loan. If you’re staying 7+ years, buying points often pays off. If you might sell or refinance within 3-5 years, take the par rate (or even take lender credits to reduce closing costs). Run both scenarios through our mortgage calculator to find your break-even point.