The single biggest lever for getting a cheaper mortgage is shopping multiple lenders, but it’s far from the only one. Between your credit score, down payment size, loan type, discount points, and negotiable fees, there are several places to shave thousands, or even hundreds of thousands, off what you’ll pay over the life of your loan. Here’s how to work each one.
Get Quotes From at Least Four Lenders
Most borrowers dramatically underestimate how much rates vary from one lender to the next. According to a 2025 Freddie Mac report, getting at least four quotes can save you $600 to $1,200 per year. Research from the Federal Reserve Bank of Philadelphia found that even one additional quote beyond your first can lower your rate by up to 0.28 percentage points.
On a $350,000 loan, a quarter-point rate difference works out to roughly $50 to $60 per month, or more than $18,000 over 30 years. That’s real money for a few hours of comparison shopping. Include a mix of lender types: large banks, credit unions, online lenders, and mortgage brokers. Each pulls from different pricing models, and the cheapest option is rarely the one you’d guess.
One common worry is that multiple credit inquiries will hurt your score. They won’t, as long as you do your shopping within a focused window. Credit scoring models treat all mortgage inquiries made within a 14- to 45-day period as a single inquiry.
Raise Your Credit Score Before You Apply
Your credit score is one of the biggest factors in the rate you’re offered. The CFPB’s rate explorer tool illustrates this clearly: a borrower with a 625 score might see rates ranging from 6.125% to 8.875%, while a borrower with a 700 score could see offers from 5.875% to 8.125%. At the extremes, that gap adds up to as much as $264,523 in extra interest over a 30-year loan.
If your score is below 740, spending a few months improving it before you apply can pay off enormously. The most effective short-term moves include paying down credit card balances (aim to use less than 30% of your available credit, ideally under 10%), correcting errors on your credit reports, and avoiding new credit applications in the months before your mortgage. Even a 20- to 40-point improvement can bump you into a better pricing tier.
Put Down 20% If You Can
A larger down payment lowers your interest rate because the lender takes on less risk when you have more equity in the property. The CFPB notes that putting 20% or more down generally qualifies you for a lower rate.
The 20% mark also eliminates the need for private mortgage insurance, which lenders require when your down payment is smaller. PMI typically costs between 0.5% and 1.5% of the loan amount per year. On a $300,000 loan, that’s $1,500 to $4,500 annually on top of your mortgage payment. Clearing that threshold effectively makes your monthly housing cost cheaper in two ways at once: a lower rate and no insurance premium.
If 20% is out of reach, that doesn’t mean you should wait indefinitely. But if you’re close, say at 15% or 17%, it may be worth delaying a few months to cross the line.
Consider Buying Discount Points
Discount points let you pay an upfront fee to your lender in exchange for a permanently lower interest rate. Each point costs 1% of your loan amount and typically reduces your rate by about 0.25 percentage points. On a $300,000 mortgage, one point costs $3,000 and might drop your rate from, say, 6.75% to 6.50%.
Whether points make sense depends on how long you plan to stay in the home. You can calculate the break-even point by dividing the cost of the point by your monthly savings. If one point saves you $45 per month, you’d break even in about 67 months, or roughly five and a half years. If you expect to sell or refinance before then, points cost you money. If you plan to stay longer, they save you money.
Points are also tax-deductible in most cases, which slightly improves the math. When comparing loan estimates from different lenders, make sure you’re comparing offers with the same number of points. A lower rate that comes with two points baked in isn’t necessarily a better deal than a slightly higher rate with zero points.
Choose the Right Loan Type and Term
A 15-year mortgage typically carries a lower interest rate than a 30-year mortgage, often by 0.5 to 0.75 percentage points. Your monthly payment will be higher because you’re paying off the loan in half the time, but you’ll pay dramatically less total interest. On a $300,000 loan, switching from a 30-year to a 15-year term can save you well over $100,000 in interest.
Beyond the term length, the type of loan matters. Government-backed loans (FHA, VA, USDA) often come with lower rates than conventional loans, particularly for borrowers with lower credit scores or smaller down payments. VA loans, available to eligible military service members and veterans, typically offer some of the lowest rates on the market and require no down payment or PMI. FHA loans accept credit scores as low as 580 with 3.5% down, though they carry their own mortgage insurance premiums.
Adjustable-rate mortgages offer lower initial rates than fixed-rate loans, usually for the first five, seven, or ten years. If you’re confident you’ll move or refinance before the fixed period ends, an ARM can meaningfully reduce your costs. The risk is that your rate adjusts upward later if you’re still in the loan.
Negotiate Lender Fees
Your mortgage’s total cost isn’t just the interest rate. Closing costs typically run 2% to 5% of the loan amount, and a meaningful portion of those fees are negotiable. The CFPB advises borrowers to ask for a justification for each lender-charged fee. If the lender charges both an underwriting fee and a processing fee, for example, ask what each covers. You may find a fee that can be waived or reduced entirely.
Fees paid to third parties, like appraisal fees, credit report fees, and flood certification fees, are harder to negotiate because the lender pays a set price for those services. Government-imposed charges like recording fees and transfer taxes can’t be negotiated at all. But origination fees, application fees, and rate-lock fees are all within the lender’s control and are fair game.
The Loan Estimate form, which every lender must provide within three business days of receiving your application, breaks down all costs in a standardized format. Use it to compare lenders line by line. One lender might offer a slightly higher rate but charge $2,000 less in fees, which could be the better deal depending on how long you keep the loan.
Lock Your Rate at the Right Time
Mortgage rates fluctuate daily, and the rate you’re quoted when you first apply isn’t guaranteed until you lock it. A rate lock holds your rate for a set period, usually 30 to 60 days, while your loan is processed. Longer lock periods sometimes cost slightly more.
If rates are trending upward, locking early protects you. If rates are falling, you might benefit from waiting, though timing the market is risky. Some lenders offer “float-down” options that let you lock your rate but take advantage of a lower rate if one becomes available before closing. Ask about this feature, as it can provide a safety net without giving up potential savings.
Refinance When Conditions Improve
Getting a cheaper mortgage doesn’t end at closing. If rates drop meaningfully after you buy, or if your credit score improves significantly, refinancing can lower your monthly payment and total interest. The general rule of thumb is that refinancing makes sense when you can reduce your rate by at least 0.5 to 0.75 percentage points, though the exact math depends on your closing costs and how long you plan to stay.
Refinancing comes with its own closing costs, typically $2,000 to $6,000, so run the break-even calculation the same way you would with discount points. Divide the total cost of refinancing by your monthly savings to see how many months it takes to come out ahead.