When it comes to buying a home or refinancing, mortgage interest rates are a critical factor in determining how much you’ll pay over the life of the loan. California, with its unique housing market, often has slightly different trends than other parts of the country. If you’re a homeowner looking to upgrade your property, it’s also important to consider energy-saving home loan programs that could reduce both your mortgage and utility costs in the long run.
In this blog, we’ll break down:
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The average mortgage interest rates in California for 2025
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The best energy-saving home loan programs available to homeowners in the state
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Tips on how to navigate these options for maximum savings
What Is the Average Mortgage Interest Rate in California?
The mortgage interest rate is the percentage of the loan amount that lenders charge you for borrowing money. It’s a key factor in determining how much you will pay monthly and the total cost of your loan.
As of July 2025, the average mortgage rates in California are as follows:
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30-year fixed-rate mortgage: 6.76%–6.86% APR
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15-year fixed-rate mortgage: 5.87%–6.13% APR
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5/1 Adjustable Rate Mortgage (ARM): 6.50%–7.49% APR
These rates can vary depending on your lender, location within California, and most importantly, your credit score and financial profile. In general, California’s rates follow the national trends, but due to the high cost of housing in many areas, rates can sometimes be a bit higher compared to the national average.
Why Are Mortgage Rates High in 2025?
Mortgage rates have remained elevated due to several economic factors:
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Federal Reserve Policies: The Federal Reserve has maintained a high federal funds rate since mid-2024 in an effort to curb inflation. This directly impacts the interest rates that lenders offer.
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Inflation Concerns: Despite economic slowdowns, inflation remains a concern, which keeps the rates higher.
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Rising Housing Prices: In California, home prices are notoriously high, and with rising demand, mortgage rates tend to stay high to ensure lenders remain competitive while balancing risk.
How Can You Get the Best Mortgage Rate in California?
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Check Your Credit Score: Lenders offer the best rates to borrowers with high credit scores (typically 700 or higher). Before applying for a mortgage, check your credit and take steps to improve it if necessary.
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Consider a Larger Down Payment: The more equity you have in your home, the better rates you may qualify for. A larger down payment also reduces your overall loan balance.
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Shop Around: Compare offers from multiple lenders. Don’t hesitate to negotiate terms, especially if you have strong financial credentials.
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Consider Loan Types: If you plan to stay in your home for a while, a 30-year fixed mortgage may make sense, but if you’re planning to sell or refinance in a few years, a 5/1 ARM might offer lower initial rates.
Energy-Saving Home Loan Programs in California
With the increasing focus on energy efficiency and sustainability, California offers several home loan programs that can help homeowners save on both their mortgage and utility costs. Here are some of the most popular energy-saving financing options:
1. GoGreen Home Energy Financing Program
California’s GoGreen Home program is designed to help homeowners improve energy efficiency by offering low-interest loans for eligible improvements. These loans can cover projects like:
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Solar panels and energy-efficient windows
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Upgrading HVAC systems, insulation, and water heaters
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Electric vehicle (EV) chargers and more
The GoGreen Home loan is a great option for homeowners who want to make energy-saving upgrades but don’t have the upfront cash to pay for them. The program is administered by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) and partners with credit unions to offer competitive rates.
Benefits of GoGreen Home Financing:
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Low interest rates starting at around 3.98% APR
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Loan terms ranging from 2.5 to 15 years
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No upfront payments; costs are added to your mortgage
2. FHA Energy Efficient Mortgage (FHA-EEM)
If you’re purchasing a new home or refinancing, the FHA Energy Efficient Mortgage (FHA-EEM) allows you to finance energy-efficient upgrades into your mortgage. This program is perfect for people buying a home and looking to make energy-saving improvements right away.
The FHA-EEM can help you roll energy-saving improvements like insulation, windows, HVAC systems, and solar panels into your mortgage, with the goal of improving energy efficiency and lowering utility bills.
Key Features of FHA-EEM:
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Available when purchasing or refinancing a home
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Eligible improvements must be cost-effective and approved by a home energy assessment
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You can finance up to 5% of the home’s value for energy improvements
This program is a great way to improve your home’s energy efficiency without making large upfront payments, while also enjoying the benefits of a more sustainable living space.
3. PACE Financing (Property Assessed Clean Energy)
Another option for homeowners in California is PACE Financing, a program that allows you to finance energy-efficient upgrades through your property taxes. You can finance energy-saving improvements like:
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Solar power systems
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Roofing and insulation
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Energy-efficient appliances
With PACE financing, you can repay the cost of these upgrades through annual property tax assessments.
Benefits of PACE Financing:
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Long repayment terms of up to 20 years
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No upfront costs; financing is added to your property taxes
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You can transfer the obligation to future homeowners if you sell the property
Which Program Is Right for You?
The right energy-saving loan for your home depends on your specific needs and financial goals:
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GoGreen Home Financing is ideal for homeowners looking for low-interest loans to upgrade their home’s energy efficiency.
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FHA-EEM is perfect if you’re purchasing or refinancing and want to include energy-efficient upgrades into your mortgage.
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PACE Financing works well if you prefer property tax assessments and long repayment terms.
Each of these programs offers a way to improve the comfort of your home, reduce utility costs, and make your property more environmentally friendly—without breaking the bank.
Final Thoughts
With mortgage one home loans hovering around 6.8% for 30-year loans in California, now is a crucial time to shop around for the best rates. Pairing your mortgage with energy-efficient financing options like GoGreen or FHA-EEM can further reduce your long-term financial burden, making your home more energy-efficient and sustainable.
If you’re considering making energy upgrades or buying a new home, exploring these programs can help you save both on your monthly mortgage payment and future utility costs. Make sure to compare your options, speak with a lender, and assess what’s right for your financial situation.