How to get the best mortgage rate

There are plenty of steps you can take on a personal level to make sure you get the best mortgage rate possible. And it’s worth it — getting a lower rate will leave more room in your budget for the things that matter. Comparing options, improving your finances and researching mortgage options can save you thousands of dollars over the life of your loan.

6 steps to get the lowest mortgage rate

1. Compare offers from multiple mortgage lenders

When you’re looking for a mortgage, don’t just accept the first rate you’re quoted. Shop around with at least three lenders to get a sense of the options available. Look at mortgage lender reviews to see what other consumers think, too. And if you’re not sure where to start, you can view multiple offers in minutes by comparing mortgage rates on Bankrate.

“Shop and compare based on the loan estimates received,” says Valerie Saunders, a past president of the National Association of Mortgage Brokers (NAMB). “You wouldn’t normally purchase a car without test-driving it first. Test drive your loan before proceeding with your purchase.”

Even if the interest rates are comparable, different lenders’ offers will come with different fees, closing costs and more. By shopping around, you can choose the offer with the most favorable terms for you.

2. Maintain and improve your financial profile 

Lenders consider multiple aspects of your finances when you apply for a mortgage, but your credit score, employment, income and current debt will play the biggest roles in whether or not you get approved — and the interest rate you receive.

Taking the time to improve your credit score is an important first step to getting a lower mortgage rate. “A credit score is always an important factor in determining risk,” says Saunders. “A lender is going to use the score as a benchmark in deciding a person’s ability to repay the debt. The higher the score, the higher the likelihood that the borrower will not default.”

For employment, lenders prefer to see at least two years of steady employment and earnings, ideally from the same employer. Borrowers who are self-employed or have multiple part-time jobs may find qualifying more of a challenge, but it’s not impossible. In either case, you’ll need to submit proof of income, such as bank statements and tax returns for your mortgage application.

In general, lenders prefer that your mortgage payments take up no more than 28% of your gross monthly income. Your debt-to-income (DTI) ratio should be no more than 36% of your gross monthly income, including your mortgage payment. For example, if you make $5,000 per month, you’ll want a mortgage payment of no more than $1,400 ($5,000 x 0.28). Your mortgage and other debt payments should ideally remain below $1,800 ($5,000 x 0.36).

3. Save for a larger down payment

Paying more upfront with a larger down payment can help you get a lower mortgage rate. Lenders use a pricing matrix that adjusts your rate based on both your credit score and your down payment within a range. Having a higher down payment, in most cases, will land you with a lower mortgage rate.

While at least 20% is considered ideal, lenders do accept lower down payments — just be aware that putting down less usually means you’ll pay more in interest, and you’ll have to pay private mortgage insurance (PMI). PMI costs about $30 to $70 per month for every $100,000 borrowed, according to Freddie Mac.

4. Research different mortgage loan types and terms

A 30-year, fixed-rate mortgage is the most common type. But if you think you’ve found your long-term home and have good cash flow, you might consider a 15-year term instead — you’ll pay more each month, but you’ll pay off your home sooner, and interest rates on 15-year mortgages tend to be lower than those of other mortgage options.

Alternatively, you might consider an adjustable-rate mortgage (ARM). With these types of loans, you’ll start with a fixed rate for a set time — often five or seven years — which is typically lower than what you’d get with a fixed-rate mortgage. After this period ends, your interest rate will fluctuate, either increasing or decreasing at intervals for the remainder of the term.

Government-backed loans may also offer lower rates than conventional loans. Options include:

• FHA loans: Insured by the Federal Housing Administration, FHA loans are popular with first-time homebuyers because of their flexible financial requirements.
• VA loans: If you or your spouse have served in the military, you might be eligible for a VA loan, which is guaranteed by the U.S. Department of Veterans Affairs.
• USDA loans: Guaranteed by the U.S. Department of Agriculture, the USDA loan program is designed to help low- and moderate-income people in eligible rural areas buy a home.

Some state and local government programs aimed at first-time homebuyers also charge below-average interest rates.

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5. Consider paying mortgage points

If you’re willing to pay a fee, you can buy your way to a lower interest rate using mortgage points (sometimes called discount points). Each point typically costs 1% of your mortgage amount and typically reduces your interest rate by 0.25 percent, though the exact amount varies by lender.

Think of mortgage points as a form of prepaid interest: Let’s say you have a $400,000 home loan with a 6.5% interest rate. If you want to lower your rate, you could buy a mortgage point for $4,000 and knock the rate down to 6.25%. Keep in mind, though, that recouping the upfront costs typically takes around five years, so this strategy isn’t ideal if you plan on selling within that time.

6. Lock in your mortgage rate

The closing process can take several weeks, during which mortgage rates can (and probably will) fluctuate. So, after you sign the home purchase agreement, ask your lender to lock in your rate. The service sometimes comes with a fee, but it often pays for itself, especially in volatile rate environments. Keep in mind that rate locks usually apply only for a set time, so it’s best to work with your lender to avoid delays on the road to closing.

How much could you save with a lower mortgage rate?

How much could shopping around for mortgage rates really save you? The difference between a 5.75% rate and 6.75% rate on a 30-year, $350,000 mortgage is over $80,000. That’s also an difference of over $200 a month to your payment. What can seem like a small change in interest adds up significantly over time. 

What’s more, you’ll pay that interest upfront through the amortization process. At the start, you’ll pay down a little principal but most of your monthly payment will go towards interest. You’ll pay less and less interest as your principal decreases. Depending on your rate and loan amount, it can take over half the length of your loan for principal to become a greater part of your monthly payment than interest. 

Next steps

Now that you understand how to land the best rate, start taking steps to secure that rate in the timeframe that works best for you. Save for your down payment, shore up your finances and get ready to apply for preapproval with multiple lenders. Use Bankrate to find some of the lowest rates available on the market. Our tool to compare 30-year mortgage rate offers is a great place to start looking at both the interest rate and fees (like mortgage points) you will pay. 

Frequently asked questions

• Will mortgage rates go down in 2026?

  Many housing experts predict that rates will stay at or near 6% for much of 2026 — sometimes rising a bit higher, perhaps even dropping a bit lower at times. But rates are not expected to fall dramatically. Read our weekly analysis to stay abreast of the latest mortgage rate news.

• Can you negotiate your mortgage rate?

  Yes, you can negotiate your mortgage rate. When you shop around with different lenders and get a range of quotes, you can use those offers to try to negotiate a lower rate with a desired lender.

• Will mortgage rates ever be 3% again?

  It’s not likely — at least, not anytime in the near future. The ultra-low rates from 2020 into 2022 were in direct response to a global pandemic that caused, among other things, a spike in unemployment. Similarly, the low rates of the 2010s were largely caused by the slow recovery from the 2008 economic crisis.

• What market factors affect mortgage rates?

  Mortgage rates change often based on a few factors, including:

  • Inflation and other economic conditions.
  • The Federal Reserve doesn’t directly set mortgage rates, but its policies can affect the cost of your loan. The Fed may increase or decrease rates in an effort to slow inflation or spur growth, and these moves can indirectly translate to higher or lower mortgage rates.
  • Mortgage rates move more directly with 10-year Treasury bond yields, which, in turn, are based on investor sentiment and economic trends.