How to Get the Best Mortgage Rate for You
Key Takeaways
- Qualifying for a competitive mortgage rate can help make your home purchase more affordable.
- Improving your credit score and other financial credentials can help you qualify for a good rate.
- Choosing the right type of loan for your specific financial circumstances will help you get the most competitive rates and terms available.
- You can buy points to lower your rate if it makes financial sense to do so.
When you are buying a home, you always want to get the best possible mortgage rate, but what does that look like? As mortgage rates rise and fall over time, it can be difficult to pinpoint what is “good” when you decide to apply for a home loan. In the past few years, record-low mortgage rates available during the pandemic have ended, while rates now remain stubbornly above 6% as of mid-2026.
If you're buying a home in a higher-rate environment, you can still take steps to ensure your qualifying rate is as low as possible based on your financial circumstances and what your lender has to offer.
What’s a “Good” Mortgage Rate?
A "good" mortgage rate will vary with current financial markets. For example, what may have seemed like a steep rate back in 2020 might be favorable in today’s market. It’s also important to consider that what’s best for you is based on your eligibility and affordability. You want to find a rate that allows you to comfortably afford your mortgage payment, and you need to meet specific lender requirements. What’s “good” for a first-time homebuyer with minimal credit history is likely to look much different than what’s “good” for a refinance customer with a near-perfect score of 800+.
Here are some factors that can flag a rate as “good” for borrowers:
- A rate that is at or below the industry average
- A rate that is lower from one lender compared to others
- A rate that provides affordable housing payments
Market conditions greatly affect what people consider to be a good rate, as mortgage rates change over time.
For example, during the pandemic, it was possible to get fixed mortgage rates below 3.00%. A rate below the late-September 2026 average mortgage rate of 7% would probably be considered good.
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7 Tips to Better Qualify for a Good Mortgage Rate
Mortgage rates can vary based on many factors, including your location, inflation, market volatility, the Federal Reserve’s benchmark interest rates, Treasury yields, investor sentiment, and overall economic conditions. Most of these factors are outside of your control.
However, there are also steps you can take to improve your qualifications for affordable home loan rates. These seven actions can help get you on the right path:
1. Build up Your Credit Score
The minimum credit score to buy a house varies by lender and loan type. Higher credit scores typically give you a wider range of loan options and favorable rates. However, homebuyers with lower credit scores can still qualify for mortgages at affordable rates with programs like FHA, VA, and USDA loans. There are also simple steps you can take to improve your credit score, such as:
- Making payments on time
- Paying down your current debt
- Limiting the number of new accounts you open
As you improve your score, you can consider getting preapproved or prequalified to see which loan options you might qualify for.
2. Lower Your Debt-to-Income (DTI) Ratio
Lenders also look at how much debt you have relative to your income, because this shows whether you’ve been responsible with borrowing or are likely to struggle making on-time payments.
Lender DTI requirements may vary, but a lower DTI is likely to open the door to more loan types, and greater lender approval, which may result in more favorable rates. To improve your DTI:
- Pay down existing revolving debt, like credit cards, as much as possible
- Pay off term loans like cars, boats, motorcycles, furniture, and jewelry store purchases that have fixed monthly payments which will eliminate the debt from your DTI calculation.
- Purchase a home that's well within your budget
3. Compare Types of Home Loans
There are different types of mortgage loans available for different borrowers, and the kind of loan you pick will affect your rate. You should consider:
- FHA loans are backed by the Federal Housing Administration (FHA) and offer low down payment requirements and more flexible credit standards than many conventional loans.
- VA loans offer options with no down payment (and lower credit scores) for eligible military service members and veterans.
- USDA loans offer loans in certain areas with no-down payment and easy qualifying requirements due to the government guarantee.
- Adjustable-rate mortgages (ARMs) can offer lower initial rates, though rates may increase over time.
- Fixed-rate 15-year and 30-year mortgages provide more certainty, because your rate doesn’t change over the life of the loan
Exploring all of these options will help you find the right loan and mortgage rate for your financial situation.
4. Increase Your Down Payment
Most lenders require at least some money down on a home, although this isn’t usually necessary with VA and USDA loans.
When you consider how much your down payment should be, it’s worth noting that a larger down payment may qualify you for a lower interest rate because you have more equity in your home, which lowers the risk of lending.
If you decide on a conventional loan, a down payment of at least 20% can eliminate private mortgage insurance (PMI) costs. Here are tips for developing a strong sum to put down:
- Make a strict budget to save more aggressively for your down payment
- Put windfalls like cash gifts and tax refunds towards your future down payment
- Buy a less expensive home, so saving 20% down will be more affordable
Pro Tip
Check out our down payment calculator to see how different amounts can affect your loan costs over time.
5. Pay for Mortgage Points
Mortgage discount points allow you to buy down your mortgage rate. Discount points are essentially prepaid interest, which should save you money in the long run. Here’s what to know:
- Each mortgage point costs 1% of the loan amount, and “points” are used by your lender to reduce your interest rate.
- There’s no fixed amount that one mortgage point will reduce your interest rate. Rate reduction depends on your lender, loan type, and current mortgage market conditions.
- Buying mortgage points will increase upfront costs but can unlock long-term savings by allowing you to pay less in interest over time.
- To figure out the cost-benefit ratio of points when you have plans to refinance, be sure to consider your break-even point.
The Consumer Financial Protection Bureau provides an example of what paying points could look like. In their hypothetical scenario, a consumer borrows $180,000 with a 30-year fixed-rate loan at 5.0%. They plan to keep their mortgage for a long time, and decide to pay an additional $675 at closing to get a lower rate of 4.875%. Paying 0.375 points upfront saves the consumer $14 with each monthly mortgage payment for the life of the loan.
6. Explore a Shorter Loan Term
Loans with shorter repayment terms tend to have lower interest rates—and an opportunity for savings—because they generally carry less risk. Savings come from paying less in interest over the life of the loan, though monthly payments will be higher than longer-term loans that require a quicker payoff.
Be sure to consider the opportunity cost of a short-term loan. You are committing to larger mortgage payments, but you’ll pay much less interest and build home equity much faster than a longer-term mortgage.
7. Consider a Future Refinance
If you’re not happy with your current home loan rate, you may be able to refinance your mortgage in the future. This means taking out a new loan with updated terms to pay off your existing one. Refinancing can make sense if interest rates drop or if you improve your finance credentials and can qualify for a better rate.
Keep in mind that even if today’s rate isn’t what you hoped for, if you’re still financially ready to take on a mortgage, refinancing leaves the door open to lower financing costs if conditions become more favorable. By refinancing, the total finance charges may be higher over the life of the loan. It will also give you time to build equity in your home.
How to Determine if a Rate Is Good for You
Low mortgage rates are appealing to homebuyers who are prioritizing affordability. Low rates can also create more wiggle room in your homebuying budget, reducing your overall financing costs and potentially allowing you to take on a higher purchase price. However, you may not qualify for the lowest rate possible in today’s market based on your current financial situation.
That’s why it’s important to think not just about the best rate possible, but putting yourself in the best position to get a rate that works for you. In addition to the steps you can take to strengthen your mortgage application, here are some other steps you can take to find the right rate match for your homebuyer profile:
- Compare house expenses: How much more will it cost you to purchase a new home versus continue with your current living situation? Knowing how your budget will change can help you establish what type of rate will keep you living within your means.
- Consider the market: Are rates likely to hit your preferred range or do you need to adjust your home search? If you’re waiting for rates to drop to a point where they were a few years ago, you might want to evaluate rate trends and whether it’s time to lower your house budget to accommodate higher financing costs.
- Review offers: Are you getting a similar rate offer from multiple lenders? Lenders tend to review applications similarly when determining your rate, so consider the market and your finances when gauging if an offer makes sense for you today.
- Calculate affordability: How does your interest rate impact your affordability and what each monthly payment looks like? Use our home affordability and monthly mortgage payment calculators to input different rates and see the estimated impact.
Keep in mind that prequalification and preapproval are also helpful tools for seeing what type of rate you may qualify for. But know whether there will be an impact to your credit score and that these tools are meant to provide estimates, not exact offers.
Final Thoughts: Shopping for the Best Mortgage Rate for You
With a better understanding of what determines your rate and how mortgage rates impact affordability, you can make a more confidence decision about what’s best for your goals and current financial situation.
Whether you’re financially ready to buy a new home today or you’re buying with plans to refinance, it's still worth the effort to qualify for the most competitive rate you can find under current conditions. To find out more, reach out to Freedom Mortgage today to get prequalified and find a loan that's a perfect fit for your needs.
Christine Rakoczy has been a financial writer since 2008, contributing to major publications, including Credit Karma, CBS MoneyWatch, WSJ, and Forbes Advisor. While her special focus is diving deep into mortgages, Christine has extensive experience with all types of financial topics.
In addition to writing for online articles, Christine has also taught business administration courses at a career college and has served as a subject matter expert on numerous business and legal courses.
Christine earned her JD from UCLA School of Law in 2008 and has a BA in English, Media, and Communications, with a Certificate in Business Administration from the University of Rochester.
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