Finding the best mortgage rate comes down to a combination of improving your financial profile, shopping multiple lenders within a short window, and understanding the levers that move your rate up or down. Even a small difference matters: on a $350,000 loan, a rate that’s 0.25% lower saves you roughly $17,000 in interest over 30 years. Here’s how to put yourself in the strongest position.
Start With Your Credit Score
Your credit score is the single biggest factor you can control. Lenders price risk directly off your FICO score, and the spread between tiers is significant. Based on CFPB data from early 2025, a borrower with a 700 score might see offers ranging from 5.875% to 8.125%, while someone at 625 could face a range of 6.125% to 8.875%. That gap at the low end, a quarter point or more, translates to tens of thousands of dollars over the life of a loan.
If your score is below 740, it’s worth spending a few months improving it before you apply. Pay down credit card balances to get your utilization below 30% (below 10% is even better), dispute any errors on your credit report, and avoid opening new accounts. Moving your score up even 20 or 30 points can unlock a meaningfully lower rate tier.
Shop at Least Three to Five Lenders
Rates vary more than most people realize between lenders, even on the same day for the same borrower. Getting quotes from at least three to five sources gives you real leverage and a clear picture of what’s available. Mix your shopping across different lender types: a large national bank, a local credit union, an online lender, and possibly a mortgage broker.
Credit unions tend to undercut banks slightly. In the second quarter of 2025, the average 30-year fixed rate at credit unions was 6.74%, compared to 6.84% at traditional banks. Credit unions also typically charge fewer fees. That said, banks periodically offer sharply lower promotional rates, so don’t limit yourself to one category.
Online lenders often have lower overhead and can be competitive on rate, but vary widely in customer service. The key is to get actual loan estimates, not just advertised rates, from each source so you can compare the full cost.
Use the 45-Day Shopping Window
Many borrowers hesitate to apply with multiple lenders because they worry about credit score damage. You don’t need to. FICO treats all mortgage-related credit inquiries within a 45-day window as a single inquiry on your credit report. Whether you apply with three lenders or ten during that period, the impact on your score is the same as one check. Start your shopping, get all your applications in within that window, and compare offers side by side.
Compare APR, Not Just the Interest Rate
The advertised interest rate doesn’t tell the whole story. Two lenders could quote you the same rate but charge very different fees at closing, including origination fees, underwriting fees, and other lender charges. The annual percentage rate (APR) folds those costs into a single number, giving you a more accurate picture of what the loan actually costs per year. When you receive loan estimates, compare APRs first, then drill into the itemized fees to understand where the differences are.
Decide Whether Discount Points Are Worth It
Most lenders offer you the option to buy “discount points” at closing to lower your rate. One point costs 1% of your loan amount and typically reduces your interest rate by up to 0.25%. On a $300,000 mortgage, one point would cost $3,000 upfront and might drop your rate from, say, 6.5% to 6.25%, saving you about $50 per month.
To figure out if that’s a good deal, divide the upfront cost by your monthly savings. In this example, $3,000 divided by $50 means you’d break even in about 60 months, or five years. If you plan to stay in the home longer than that, buying points can save you money over time. If you might move or refinance sooner, skip the points and keep that cash.
Consider a Mortgage Broker
A mortgage broker shops lenders on your behalf, which can save you time and sometimes surface wholesale rates you wouldn’t find on your own. Brokers typically charge 1% to 2% of the loan amount, paid either directly by you at closing or built into your rate by the lender. When the lender pays the broker’s commission (ranging from 0.5% to 2.75% of the loan), that cost gets baked into your interest rate, so you pay it indirectly over the life of the loan.
A good broker earns their fee by finding a rate low enough to offset that cost. Ask any broker you’re considering to show you both borrower-paid and lender-paid compensation options so you can see exactly what you’re paying for. And still get at least one direct quote from a bank or credit union to use as a benchmark.
Lock Your Rate at the Right Time
Once you find a rate you’re happy with, lock it in. A rate lock guarantees your quoted rate for a set period, usually 30 to 60 days, while your loan is processed. Most lenders offer a standard lock at no additional cost, but extending the lock period (to 90 days, for example) may come with a small fee.
Timing matters because rates move daily. If rates are trending downward and you have flexibility, you might wait a few days. But trying to time the market perfectly is risky. If you’ve found a rate that fits your budget and is competitive based on your shopping, locking it in protects you from an unexpected jump. Some lenders offer a “float-down” option that lets you take advantage of a rate drop after you’ve locked. Ask about this, as it’s not always standard but can be worth the small added cost.
Strengthen Your Overall Application
Beyond your credit score, lenders weigh several other factors when setting your rate. A larger down payment reduces the lender’s risk and often earns you a lower rate. Putting down 20% or more also eliminates the need for private mortgage insurance, which adds to your monthly cost. If you can only put down 10% or 15%, that’s fine, but know that you may be quoted slightly higher rates than someone putting down 20%.
Your debt-to-income ratio (the percentage of your gross monthly income that goes toward debt payments) also matters. Most lenders want this below 43%, and you’ll get better pricing closer to 36% or lower. Paying off a car loan or a credit card balance before applying can improve this ratio and potentially unlock a better rate.
Stable employment history and sufficient cash reserves (two to three months of mortgage payments in savings after closing) also strengthen your application. Lenders see these as signs you’re less likely to default, and that lower risk translates into better pricing.
Choose the Right Loan Type and Term
The type of mortgage you choose affects your rate. Conventional loans backed by Fannie Mae or Freddie Mac typically offer the lowest rates for borrowers with strong credit and a solid down payment. FHA loans, which allow lower credit scores and smaller down payments, carry slightly higher rates plus mandatory mortgage insurance. VA loans, available to eligible veterans and service members, often have the lowest rates of all and require no down payment or mortgage insurance.
Loan term also makes a difference. A 15-year fixed-rate mortgage will carry a noticeably lower rate than a 30-year, often by 0.5% to 0.75%. The monthly payment is higher because you’re paying the loan off in half the time, but the total interest paid is dramatically less. If you can afford the higher payment, the 15-year term is one of the most straightforward ways to get a lower rate and save money overall.
Adjustable-rate mortgages (ARMs) start with a lower rate than fixed-rate loans, but that rate resets after an initial period of five, seven, or ten years. If you’re confident you’ll sell or refinance before the adjustment kicks in, an ARM can save you money in the early years. If you plan to stay long-term, a fixed rate gives you certainty.