If you’re buying a home or looking to refinance, locking in a great mortgage rate can save you thousands.

Your interest rate significantly affects your monthly payment and the overall cost of your loan. A lower rate might not seem much at first, but that small difference can add up!

For example, if you save $75 a month on mortgage payments for a 20-year fixed loan, that totals a whopping $18,000 over the life of the loan. That’s money you could put towards home improvements or personal savings instead of interest payments.

But here’s the catch: getting the best rate isn’t just luck or perfect timing. It’s also about knowing the factors influencing your mortgage rates and taking the right steps to secure a better deal. This guide will show you exactly how to do that.

7 Steps to Score the Best Mortgage Rates

1. Review your financial profile.

Loan mortgage rates rise and fall based on various economic factors you can’t control. But one thing is for sure—you can manage your credit profile.

A strong credit history and good credit score can help you lock in a better rate, sometimes even lower than the average market rate. So check your credit report!

You can get a free copy from AnnualCreditReport.com or major credit bureaus like Experian, Equifax, and TransUnion. Reviewing it can help you track your financial health, boost your credit score, and dispute errors. Generally, a FICO® score of over 670 is considered good, but the higher it is, the better your chances are of landing the best rates. Someone looking to obtain a mortgage or refinance should aim to have a credit score over 740 if at all possible.

Average Mortgage Rates by Credit Score on 30-year Conventional Loan

Source: Curinos LLC, cited by Experian, January 3, 2025

Lenders also look at your debt-to-income (DTI) ratio, which is how much of your gross monthly income goes toward paying off debts. A DTI ratio lower than 36% will generally result in a more favorable interest rate, but mortgages are being done with DTI ratios up to 57% in some cases. Individual mortgage lenders have different standards and risk appetites, so borrowers should be sure to look at all options.

2. Improve your credit score and DTI.

Once you’ve assessed your credit profile, the next step is to strengthen it.

You’ll need a credit score of at least 620 to qualify for a conventional mortgage, while FHA mortgages may offer more flexibility. To lock in the best mortgage rates, you should aim for an excellent credit score of 740 or higher. How do you achieve that?

• Pay your bills on time. Late or missed payments can hurt your credit scores.
• Reduce your debt. Pay down your existing balances to keep your credit utilization below 30% of your limit.
• Keep accounts open. A healthy mix of credit types can strengthen your profile.
• Check credit reports regularly. Errors can drag your score down, so dispute any inaccuracies.

Another thing to focus on is reducing your debt-to-income (DTI) ratio. Ideally, you want it to be less than 36% to show you’re in a good position to repay your debts. Here are several ways to do it:

• Increase your income. A salary increase or a side job improves your capacity to pay off debt.
• Pay down high-interest debt. If you have some savings, prioritize eliminating smaller debts, like credit card balances, to lower your monthly obligations. Some lenders can utilize software solutions that might better target what debt repayment might have the largest impact on improving your credit score.
• Hold off on new debt. Avoid taking on unnecessary loans or big purchases before applying for a mortgage. It rarely makes sense to incur any large new debts prior to applying for a mortgage or during the mortgage approval process.

Every effort you make to improve your credit score and DTI can strengthen your financial profile and help you score the most competitive offers.

3. Save for a larger down payment.

Making a larger down payment can work in your favor when securing a mortgage loan. The larger your downpayment, the less risk for the lenders, potentially resulting in lower mortgage rates.

If you have enough cash saved up, an ideal down payment is at least 20%. This can help you get a lower rate and avoid paying private mortgage insurance (PMI), an additional monthly expense on top of your interest.

But don’t worry if you can’t cover that much! Many mortgage lenders also accept less than 20 percent. But remember, a lower down payment translates to increased risk, higher interest rates, and bigger monthly payments.

So try to save a little more for your down payment. Even an extra 5 percent can lower your mortgage rate!

4. Consider loan types & terms.

Instead of automatically going for a traditional 30-year mortgage, consider a 15-year mortgage if your budget allows. Shorter loan terms usually come with lower interest rates compared to longer-term options. The monthly payments might be higher, but you’ll pay off your loan faster and save thousands in interest. This option is worth exploring if you’re considering refinancing your current mortgage.

National Average Mortgage Rates

Source: Freddie Mac’s Primary Mortgage Survey, Weekly Average as of March 06, 2025

Meanwhile, if interest rates are currently high, you might want to look into an adjustable-rate mortgage (ARM). This type of loan starts with a lower introductory rate for a set period (often three, five or seven years) before adjusting at regular intervals for the rest of the term. When the rate adjustment happens, it can either go up or down, which might be risky. But that risk can be minimized if you intend to sell or refinance before that fixed period ends. That can be a strategic move.

5. Compare offers from multiple lenders.

Lenders evaluate borrowers differently, so interest rates, closing costs, private mortgage insurance, and available discounts can vary.

Pro tip: Don’t settle on the first offer you receive! Shop around and get quotes from at least three lenders to find the best deal, or go to a site that offers multiple options.

Applying for preapproval with multiple mortgage lenders can help you compare your options more effectively. If you’re refinancing, start with your current lender, as they might offer loyalty incentives.

Not sure where to begin? Check out Refinance.com. It’s a user-friendly platform that helps you find and compare lenders easily. Simply enter your details and preferences, and you’ll get a list of lenders that match your needs. From there, you can choose which lenders to work with or prequalify for a loan.

6. Take advantage of discounts and programs.

Many lenders offer discount programs, such as first-time homebuyer incentives, rate buydowns, and lender credits, to attract borrowers. Such offers can help lower interest rates, closing costs, or monthly payments. Check out what different lenders offer and take advantage of the best deals.

If you don’t mind paying more upfront, you can also buy discount points to reduce your home financing interest rate. One point costs one percent of your total loan amount—on a $100,000 loan, that’s $1,000. Typically, each point reduces the interest rate by approximately 0.25 percent, though this can vary by lender and market conditions. But it takes time to break even on the upfront cost, so do this if you plan to stay in your home long-term.

Refinance.com listings display rate buydown offers (shown in points) and the total upfront costs, calculated based on the indicated loan amount, term, and other factors.

7. Decide and lock in your rate.

Mortgage rates fluctuate daily, and it’s tough to predict them. Since the loan process, from pre-approval to closing, can take weeks, rates can shift during that time.

To protect yourself from sudden rate hikes prior to closing, ask your lender to lock in your rate. Ensure you’re comfortable with the current rate before doing so. Many lenders let you lock in for 30 days or longer, sometimes for free or with a fee, depending on the terms. The best option depends on how soon you can close your loan.

Once your rate is locked, keep the process moving. If you don’t close within the lock-in period, you could lose your rate and end up paying a higher one. So, stay on top of deadlines and work closely with your lender to ensure a smooth closing.

Key Takeaway

Lenders favor borrowers with a strong credit history and financial capacity. By taking the right steps now, you can be in a solid position to score the most competitive offers.

If you’re planning to buy a home or refinance, start early. Work on improving your credit, save for a larger down payment, and do your research. Even small steps can have a significant impact!

Most importantly, shop around. Platforms like Refinance.com can help you find and compare lenders to find the best mortgage rate today.