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12 Ways To Get a Lower Mortgage Rate
High mortgage rates don't mean you're stuck overpaying.
August 13, 2026
High mortgage rates don't mean you're stuck overpaying.
August 13, 2026
High mortgage rates don't mean you're stuck overpaying.
Even a 1% rate difference can translate into tens of thousands of dollars over the life of a loan. For example, on a $400,000 30-year mortgage, moving from 6.5% to 7.5% can mean roughly $95K–$100K in additional interest, depending on fees and exact loan terms. As of July 30, 2026, the average 30-year fixed rate sits at about 6.66% (Freddie Mac)—making every fraction of a point you shave off matter even more.
Mortgage rates eased earlier in 2026, then climbed back through mid-year toward a one-year high of about 6.66% (Freddie Mac, July 30, 2026). That means borrowers shopping today face rates that feel stubbornly elevated compared with the pandemic-era lows many remember.
The good news: you still have real levers to pull. The strategies below—covering credit, down payment, loan structure, lender shopping, and timing—can help you secure a lower rate and keep tens of thousands of dollars in your pocket over the life of your loan. Ready to see what's available? Start by exploring your options to compare mortgage purchase lenders.
Your down payment reduces how much you have to borrow to buy your home. When you make a large down payment, you'll enjoy:
A lower monthly housing expense.
A shorter timeframe for needing mortgage insurance, if required at all. For instance, you can avoid mortgage insurance if you put down 20% or more on a conventional home loan.
A faster path to becoming debt-free (if you make more than the minimum monthly payment).
A high down payment can also positively impact how much you pay in interest since you're starting with a lower balance to charge interest on.
The more you put down, the less risk for the lender—and that can mean a better rate.
Paying more up front through discount points can lower your interest rate and save you money over the long term.
One point typically costs 1% of your loan amount and is paid at closing.
Each point can reduce your interest rate, but the exact reduction varies by lender and market conditions—often around 0.25% per point, depending on your lender.
Because you're paying more upfront to lower your monthly payment, it's important to calculate your breakeven point (how long it takes for the monthly savings to outweigh the cost of the points).
Best for: Buyers who expect to keep the loan long enough to reach the breakeven point and can afford the upfront cost.
Watch out: If you sell or refinance before breakeven, points may not pay off.
Mortgage interest rates and loan fees can vary dramatically from lender to lender, so it's wise to compare quotes from multiple banks to ensure you're getting a good deal.
Don't just take the first quote.
The best way to distinguish between a competitive and subpar quote is to review the loan estimate. The loan estimate is a three-page document that the lender must provide you within three days of applying for a mortgage.
Each estimate contains important details you'll need to compare:
Interest rate and APR: The base rate plus the true annual cost, including fees.
Monthly payment breakdown: Principal, interest, taxes, and insurance costs.
Closing costs and fees: All upfront expenses you'll pay at settlement.
Cash required to close: Total amount you need to bring to closing.
Putting these documents side-by-side will help you determine which quote offers the best value for your situation. Don't just focus on the interest rate—a lender with slightly higher rates might have lower fees, making them cheaper overall.
Lenders often charge higher rates on 30-year mortgages because they carry more long-term risk. If your budget can handle a higher monthly payment, choosing a shorter term—such as a 15-year mortgage—can help you qualify for a lower rate and dramatically reduce the total interest paid.
For context, Freddie Mac's weekly survey showed the average 30-year fixed mortgage rate at 6.66% and the average 15-year fixed rate at 6.04% as of July 30, 2026. Using those rates on a $200,000 loan, the estimated monthly payment would be about $1,285 on a 30-year term versus about $1,692 on a 15-year term. The tradeoff is a higher monthly payment—but far less interest over time (roughly $262,700 total interest on a 30-year loan vs. about $104,500 on a 15-year loan).
When this makes sense: You have stable income, strong cash flow, and the higher payment won't strain your emergency fund or other priorities. If the payment feels tight, a 30-year term with extra principal payments can be a more flexible way to reduce interest while keeping breathing room.
Most borrowers default to a 30-year fixed-rate mortgage, but it's not the only option—and choosing the right loan type can meaningfully reduce your rate and total borrowing cost.
Adjustable-rate mortgages (ARMs) often start with a lower introductory rate than fixed-rate loans. That's because you're taking on more future rate uncertainty: after the initial fixed period ends, the rate can adjust up or down based on market conditions. This can be a smart strategy if you don't plan to keep the mortgage for decades.
How ARMs Work
Initial fixed period: Your rate stays the same for a set number of years (commonly 5, 7, or 10).
Adjustment period: After the intro period, the rate changes at predetermined intervals (often every 6 or 12 months).
Your rate is typically based on an index plus a lender margin—so your payment can change over time.
Important: Understand Rate Caps Before Choosing an ARM
Most ARMs include rate caps that limit how much your interest rate can change:
Initial adjustment cap: Limits how much the rate can change at the first adjustment.
Periodic adjustment cap: Limits how much the rate can change at each subsequent adjustment.
Lifetime cap: Limits how much the rate can rise over the entire loan term.
These caps help reduce "payment shock," but they don't eliminate the risk of higher payments later.
Government-backed mortgages can help you qualify for more favorable terms than a conventional loan—especially if you have a smaller down payment or a less-than-perfect credit profile. These loans are "backed" by a federal agency, which reduces the lender's risk and can translate into more flexible underwriting and, in some cases, competitive pricing.
FHA loans: Often a good fit for borrowers with lower credit scores or limited savings. FHA loans allow low down payments, but they require mortgage insurance, which increases your total monthly cost.
VA loans: Available to eligible service members, veterans, and some surviving spouses. VA loans often require no down payment and typically don't include monthly mortgage insurance, making them especially cost-effective if you qualify.
USDA loans: Designed for eligible rural and some suburban areas. USDA loans may offer 0% down for qualified borrowers, but they have location and income requirements and may include upfront and/or monthly fees.
Important: Compare Total Cost, Not Just the Rate
A government-backed loan can look cheaper on the surface, but the real cost depends on the full package, mortgage insurance (FHA), guarantee fees (USDA), funding fees (VA), and your APR. Always compare loan estimates side by side to see which option is truly less expensive over time.
When this makes sense: Government-backed loans are worth exploring if you're short on a 20% down payment, want more flexible qualifying guidelines, or may benefit from programs designed for first-time buyers or eligible service members.
What to do next: Ask lenders to quote you the same home price and loan amount across both conventional and government-backed options, then compare the APR, monthly payment, and cash needed to close.
Your credit score could cost or save you tens of thousands of dollars over your mortgage term. Mortgage rates are priced in tiers by credit score. Many lenders reserve their most competitive pricing for borrowers with credit scores in the mid-700s and above, though your down payment, debt-to-income ratio, and overall loan profile still matter.
It's smart to boost your credit score as much as possible before applying for a mortgage. Here are a few strategies to raise your score:
Pay all your bills by the due date every month.
Reduce how much you owe to 30% or less of your available credit.
Avoid applying for new credit cards or loans unless necessary.
If you're feeling discouraged by the distance between where your score is and where you want it to be, remember:
Even a 20-point increase can significantly lower your rate.
Don't assume lender fees are non-negotiable. Many borrowers successfully reduce costs by leveraging existing bank relationships or presenting competing offers from other lenders. If business has been slow, your lender may offer discounts to secure your loan.
Also consider asking the seller to cover some of your closing costs—this negotiation could save you thousands at settlement.
Mortgage rates change daily and can shift significantly between your application and closing. A rate lock guarantees your quoted rate for a specific period, typically in 15-day intervals.
Some lenders offer free rate locks, while others charge a fee or a slight rate increase. If rates are volatile or trending upward, locking makes sense. However, you could miss out on mortgage savings if rates drop during your lock period, though some lenders allow you to relock at lower rates.
Many lenders offer small rate discounts for automatic payments. For example, Citizens Bank offers a rate discount of 0.125% when you set up automatic payments and enroll in e-statements from a Citizens checking account. While modest, this discount saves money over the loan's lifetime with zero effort on your part.
First-time home buyers often qualify for assistance programs offering down payment help, closing cost grants, or below-market interest rates. Some programs provide forgivable loans, while others offer tax credits for mortgage interest paid.
Programs vary by state and locality, with eligibility based on income, occupation, or property location. Check with your state housing authority or local housing department to see what assistance is available in your area.
Trying to time mortgage rates perfectly is extremely difficult. Rates can move quickly based on inflation data, Federal Reserve policy expectations, and broader market conditions.
Instead of waiting for the perfect rate, focus on what you can control. Improve your credit score, reduce your debt-to-income ratio, build a larger down payment, and compare multiple lenders to see where you can get the most favorable overall deal.
If you are ready to buy and the monthly payment fits your budget, consider moving forward and using a rate lock to protect against short-term increases. If rates drop later, refinancing may be an option, but you should buy based on affordability today, not on a prediction about where rates might go tomorrow.
While mortgage rates remain higher than the ultra-low levels seen a few years ago, you are not powerless to reduce your borrowing costs. The biggest levers are the ones you can control: improving your credit score, lowering your debt-to-income ratio, increasing your down payment, choosing the right loan type, and comparing offers from multiple lenders.
Even small improvements can add up over 15 or 30 years. Focus on the total cost of the loan by comparing APR, fees, and cash needed to close, not just the headline interest rate. If the payment fits your budget today, you can move forward confidently and keep refinancing on the table if rates fall in the future.
This guide is designed for anyone looking to reduce their mortgage rate. You'll find it especially useful if you're:
A first-time buyer — Use credit-score improvements, down-payment strategies, and first-time-buyer programs to secure more favorable terms from day one.
A move-up buyer — Explore discount points, shorter loan terms, and lender negotiations to minimize interest costs on a larger loan.
A veteran or active service member — VA loans may offer competitive rates with no down payment and no monthly mortgage insurance.
A homeowner weighing refinance — Rate locks, timing strategies, and the "buy now, refinance later" approach can help you act when the numbers work.
Now that you know the levers, here's how to put them to work:
Get at least 3–5 loan estimates. Compare APR, fees, and cash to close—not just the headline rate. Start by reviewing our mortgage lender reviews.
Check your credit tier. Pull your credit reports, dispute any errors, aim to reduce your balances below 30% of available credit, and see how your debt-to-income ratio affects your mortgage before applying.
Run a break-even calculation on points. If you're considering discount points, divide the upfront cost by your monthly savings to see how many months until you come out ahead.
Explore first-time-buyer programs. If this is your first home, look into state and local grants, tax credits, and below-market rate programs (see tip 11 above) you may qualify for.
It depends on how long you plan to keep the loan. Divide the upfront cost of the points by your monthly savings—if you'll stay past that break-even point, buying points can pay off.
Your actual rate is locked in at closing, but some lenders offer modest discounts for autopay enrollment. Paying extra toward principal or requesting a loan recast can lower your monthly payment, though neither changes the interest rate itself.
Lenders generally reserve their most competitive rates for borrowers with credit scores in the mid-700s and above. Even a 20-point improvement can move you into a lower pricing tier.
Yes. A larger down payment reduces the lender's risk, which can translate into a lower rate. Putting down 20% or more also lets you avoid private mortgage insurance.
Aim for at least three to five loan estimates. Comparing multiple offers helps you spot fee differences and ensures you're getting a competitive rate.
This article relies on a combination of primary and secondary sources. We referenced Freddie Mac's Primary Mortgage Market Survey (PMMS) for current and historical mortgage rate data, the Consumer Financial Protection Bureau (CFPB) for guidance on how credit scores affect mortgage pricing, the USDA's Single Family Housing Guaranteed Loan Program documentation, and USA.gov's homebuyer assistance resources. Where expert perspectives are included, we sourced quotes from mortgage professionals with verifiable credentials and public bios.
Freddie Mac Primary Mortgage Market Survey (PMMS)
Consumer Financial Protection Bureau (CFPB) — Explore Interest Rates
USDA Single Family Housing Guaranteed Loan Program
USA.gov — Buying a Home Programs
Laura has been a freelance writer since 2018. Her work primarily focuses on managing your money, navigating your career, and running a successful business. Her words have been featured in U.S. News & World Report, Fortune Recommends, The New York Post, USA Today, and many other publications.