Mortgage rates currently stand significantly lower than January 2025 levels. A Yahoo Finance analysis of nearly 5,000 lenders reporting 2024 data under the Home Mortgage Disclosure Act shows that national banks, credit unions, and homebuilders financing their own construction offered the most favorable rates to diverse borrowers that year.
Since rates fluctuate and vary by lender, obtaining the lowest rate requires research into credit scores, debt-to-income ratios, and down payment amounts. With that information, prospective buyers can contact lenders for estimates based on creditworthiness.
After identifying two or three contenders, applying for preapproval with each yields more exact mortgage rates. For those not purchasing new construction from lenders offering buydowns or credit union members, eight strategies exist for securing the lowest rates through regular, well-known lenders.
Improving credit scores remains fundamental. Mortgage rates vary by credit score, with savings increasing as scores move to higher tiers. For instance, a FICO Score of 620 might earn an APR of 7.26% based on early January rates with one discount point, while a score of 640-659 could improve the rate to 7.09%. Larger discounts accompany further score increases.
Lowering debt-to-income ratios also impacts rates. More monthly debt typically means higher mortgage rates. Aiming for a DTI of 25% or less qualifies borrowers for the lowest rates, though lenders may consider ratios up to 50% with preference for 35% or less.
Making larger down payments represents another strategy. While loans require as little as 3% down, paying more upfront earns lower rates. The National Association of REALTORS® reported a median down payment of 10% for first-time buyers in 2025.
Buying discount points, which prepay interest to lower ongoing rates, gains popularity during higher rate periods. One point equals 1% of the loan amount and generally reduces the interest rate by one-quarter of a percentage point. Points can be purchased in any number or fractional amounts.
Lenders sometimes add points to make offered rates appear more enticing, though buyers actually pay for the discount with upfront fees. When shopping, compare loan offers with zero points first, then decide how many points to purchase.
A Zillow survey of home buyers over seven months in 2024 found about 45% obtained rates below 5% when rates were above 6.5%. One-third negotiated special financing with sellers or builders, more than one-quarter got rate buydowns, and nearly a quarter bought discount points.
To get below 5% when rates are near 6%, buyers typically need four to five discount points. Each point reduces the rate by approximately a quarter point. For a $300,000 mortgage, one point equals $3,000, making five points approximately $15,000.
Interest rate buydowns lower mortgage rates for the first few years of a loan term. Home builders, sellers, and some lenders occasionally offer buydowns to boost sales, though this option remains rare among mortgage lenders. Guild Mortgage and AmeriHome Mortgage offer national buydown programs.
A buydown might lower a rate from 7% to 6.5% for two years. While providing short-term interest breaks, payments and total interest may be higher long-term. Lenders qualify borrowers based on permanent rates, not temporary buydown rates, and monthly payments rise after the discount period ends.
Adjustable-rate mortgages have returned to popularity as rates rise. ARMs feature fixed introductory rates for three to 10 years, then change regularly, usually once or twice annually. Shoppers should look for introductory rates lower than fixed-rate mortgages, choose terms aligned with planned home stays, and budget for potential payment increases after the introductory period.
Shorter-term mortgages with 20- or 15-year fixed terms typically offer lower rates than traditional 30-year terms, though monthly payments tend to be higher.
Assumable mortgages allow taking over remaining payments of existing loans, requiring lump sum payments to current owners for equity value or profit. Most conventional mortgages aren't eligible, so buyers need sellers with FHA, VA, or USDA loans.
Recently, home loan rates have been in the low-to-mid-6% range. Realtor.com data shows 71.3% of existing homeowners have rates below 5%, and 53.4% have rates below 4%, making refinancing currently unfeasible for many.
Mortgage rates remain cyclical. After moving in, homeowners should monitor rates for dips of about 1% to 2% below current rates before refinancing, considering closing costs and whether goals involve lowering monthly payments or paying off homes sooner.
Freddie Mac records show the lowest 30-year mortgage rate ever was 2.65% in January 2021, requiring dramatic financial stress like COVID-19 to reach such levels. Rates rose to 5% fifteen months later. Returning to 3% rates would likely require another drastic event.
VA loans, particularly 15-year VA loans, usually have the lowest mortgage rates because shorter terms feature lower rates than longer terms.