How to get the best mortgage rate

Interest rates depend largely on the broader economy. But there are plenty of steps you can take on a personal level to make sure you get the best mortgage rate possible — and save money on your loan over time.

8 steps to get the lowest mortgage rate

1. Improve your credit score

Boosting your credit score is a great first step to getting a lower mortgage rate. “A credit score is always an important factor in determining risk,” says Valerie Saunders, a past president of the National Association of Mortgage Brokers (NAMB). “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.”

To be considered for a conventional mortgage, you’ll generally need a score of 620 or higher. However, the best mortgage rates go to borrowers with credit scores of 740 or above.

To improve your score, pay your bills on time and pay down or eliminate credit card balances. If you must carry a balance, make sure it’s no more than 20% to 30% of your available credit limit. Also, check your credit score and report regularly and look for any mistakes. If you find errors, correct them before applying for a mortgage.

2. Maintain a steady employment record

Lenders prefer to see at least two years of steady employment and earnings, ideally from the same employer. Be prepared to show pay stubs from at least 30 days prior to your mortgage application and W-2s from the past two years. If you earn bonuses or commissions, you’ll need to provide proof of those as well.

Gaps in your work history won’t necessarily disqualify you, but the length of those gaps matters. A short period of unemployment due to illness is easier to explain to a lender than, say, unemployment of six months or more.

Borrowers who are self-employed or have multiple part-time jobs may find qualifying more of a challenge, but it’s not impossible. If you’re self-employed, you might need to furnish business records, such as profit and loss statements, in addition to tax returns, to round out your mortgage application.

3. Save for a bigger down payment

Paying more upfront with a larger down payment can help you get 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. Understand your debt-to-income ratio

Your debt-to-income (DTI) ratio compares your total monthly debt payments to your gross monthly income.

In general, lenders prefer that your mortgage payments take up no more than 28% of your gross monthly income, and that your mortgage and other debt payments total no more than 36%. 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).

For a conventional loan, lenders may approve DTI ratios of up to 45% for borrowers with significant savings or a strong financial profile. You can improve your DTI by increasing your income or paying off debt.

Debt-to-income ratio calculator

A debt-to-income, or DTI, ratio is calculated by dividing your monthly debt payments by your monthly gross income.

Calculate your debt-to-income ratio

5. 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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6. 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.

7. 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,” Saunders says. “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.

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8. 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? Check out the chart below to see how the savings can add up on a $350,000 home loan with a 30-year, fixed mortgage.

Market factors that affect your mortgage rate

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.

FAQs

• 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.