After a volatile start to the year, mortgage rates seem to have settled into a new, slightly lower groove.

The most popular types of home loans cost between 6.2% and 6.4% much of last year. Now, they're averaging 6.0% to 6.2%.

We'll let the economists argue over how much credit the Federal Reserve's seven-month campaign to make consumer borrowing less expensive should get.

But here are the four trends anyone in the market for a home loan should know about:

Trend 1. If you have good credit, expect to get a very good deal on a traditional 30-year, fixed-rate loan. How good? Expect to pay less than 6%.

Trend 2. If you have bad credit, you're in big trouble. It's difficult, if not impossible, to get a loan if your credit score is below 620. You'll pay a penalty in the form of higher mortgage rates if your score is between 620 and 720.

Trend 3. If you need to borrow a lot of money -- anywhere from $417,000 to $729,500, depending on the location -- a jumbo loan will be very expensive. Expect to pay well above 7%.

Trend 4. Adjustable-rate loans aren't cheap enough to be a good alternative to fixed-rate loans for most borrowers.

Let's take a closer look at each of these trends.

TRADITIONAL FIXED-RATE MORTGAGES

Interest.com's most recent survey of major lenders, taken May 14, shows the average cost of a 30-year, fixed-rate loan is a very affordable 6.19%.

Our database of the best mortgage rates from across the country shows lenders charging borrowers with good credit as little as 5.875% for traditional mortgages with fees of $1,000 or less.

At that rate, your payments would be only $592 a month for every $100,000 you borrowed. (Our mortgage calculator can tell you what the payments would be for any loan at any interest rate.)

Yes, lenders are being more demanding. Be prepared to fully document your income, assets and other debts. But any time you can find a 30-year, fixed-rate mortgage for less than 6.5%, you're getting a good deal.

Home buyers routinely paid 7% or 8% during the mid-to-late '90s, and 10% or more was the norm throughout the '80s and early '90s. As we mentioned, during most of 2007, fixed-rate mortgages cost 6.2% to 6.4%.

The only recent time they were cheaper was during the summer of 2003, when mortgage rates briefly bottomed out at an average 5.28%. That was the lowest they've been since Interest.com (and its print predecessor) began its weekly survey of major lenders in 1985.

BAD CREDIT

Only nine of the 77 banks recently surveyed by the Federal Reserve are still making subprime loans of any kind.

And seven of those nine said they're continuing to tighten the qualifying standards for those mortgages, making them harder to obtain.

The deceptive, costly, adjustable-rate loans created especially for subprime borrowers, such as option ARMs and 2/28 and 3/27 mortgages, have virtually disappeared.

That's a good thing.

They may have been easy to get, but they were horrible loans. Hundreds of thousands of borrowers are defaulting because they can't keep up with the rapidly rising payments.

The record number of foreclosures caused by those loans is driving the current mortgage crisis and pushing the economy toward recession.

More than 1.5 million homeowners lost their properties to foreclosure last year -- more than twice the historical average -- and that figure may exceed 2 million in 2008.

If your credit score is above 700, you're good to go. If it's below 640, you'll have a tough time getting approved for any type of mortgage.

Your best -- indeed, almost only -- bet is to qualify for a federally backed loan program.

You'll need a credit score of at least 590 or 600 to have a shot at that, and it will still be a long shot.

JUMBO LOANS

The situation is only slightly better for borrowers who need a lot of money.

Most loans are now bought, packaged and resold to investors by two government-chartered companies, commonly referred to as Freddie Mac and Fannie Mae.

Investors are more willing to buy the debt packaged and sold by Freddie Mac and Fannie Mae, because those mortgages must meet their standards for creditworthiness, making them less risky than nonconforming loans that don't qualify.

Borrowers who can meet Freddie Mac and Fannie Mae's requirements benefit, too, by paying lower interest rates than they would for nonconforming loans.

One of those rules had made it impossible for Freddie Mac and Fannie Mae to buy loans for more than $417,000.

That's why jumbo loans used to cost about a half-point more than conforming, fixed-rate loans.

But since the mortgage crisis began last year, investors have been even more reluctant to buy loans not backed by Freddie Mac and Fannie Mae.

That's made jumbo loans harder to obtain and more expensive. The average cost was 7.41% in our most recent survey, which means the spread between jumbo and conforming loans has grown to a substantial 1.2 percentage points.

When Congress raised the loan limit in 224 high-cost counties to as much as $729,750, it expected more consumers would be able to qualify for cheaper loans.

So far, it hasn't helped much.

Few banks have been willing to make loans for more than $417,000, even if they met Fannie Mae and Freddie Mac's standards, and those that did were charging higher-than-expected interest rates.

That changed in early May, and perhaps we'll see more of these loans being written over the next few weeks. Find out more in our complete report on jumbo loans.

ADJUSTABLE-RATE MORTGAGES

Our survey found the average rate for the most popular type of ARM is 5.86%. (That's a 5/1 ARM, a 30-year loan with an initial rate guaranteed for five years and resetting each year afterward.)

The only reason to opt for an ARM is to get lower monthly payments -- at least for a few years.

When the spread between an ARM and a fixed-rate loan is just three-tenths of a point, that's not quite enough. It's the biggest reason only six out of every 100 mortgages being written right now are ARMs.

FEDERAL RESERVE

We know many borrowers can't understand why mortgage rates aren't falling like a rock after the Federal Reserve has made such a determined effort to make borrowing cheaper and avoid a recession.

The Fed serves as the nation's super bank, determining how much the commercial banks we deal with every day must pay to borrow money.

When it lowers its rates, the banks are supposed to lower their rates, charging us less for everything from home loans to credit cards.

The discount rate is what banks must pay to borrow money directly from the Fed. On April 30, it was lowered another quarter point to 2.25%, down from 5.75% last August.

The overnight rate is what the Fed expects banks to charge each other for loans. It was reduced another quarter of a point to just 2%, down from 4.75% last September.

But lots of other factors, including the price of government bonds, the inflation rate and even the willingness of investors to buy mortgages, play just as big a role in determining mortgage rates.

Indeed, it would seem they're playing a much bigger role than anything the Federal Reserve is doing.

Even though banks are paying half what they did last summer to borrow money, mortgage rates are certainly not half what they were.

The first time the Federal Reserve cut rates this year, mortgage rates for those types of loans fell to 5.5% -- a four-year low. But borrowers who raced out to apply for loans were disappointed when mortgage rates shot back up before they could be approved.

The Fed left the door open for future rate cuts, saying it "will act as needed to promote sustainable economic growth and price stability." We don't think mortgage rates will notice much.

By Mike Sante

Interest.com Managing Editor

Have a question about your finances? Ask us at editors@interest.com.