Secure lower mortgage rates in 2026
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After years in the high sixes and sevens, 30-year fixed mortgage rates in the U.S. fell to 5.99% on January 9, the first time since February 2023, and have since hovered just over 6%. While it is tempting to wait for rates to drop further, timing the market is difficult, and experts differ on how much more rates could move.
In this environment, your focus could be on optimizing your profile and leveraging lender competition to secure a better rate than the national average. Consider these strategies:
1. Assess Your Financial Situation
Before even looking for that dream house and asking about mortgage rates, make sure you present yourself as a low-risk borrower.
Check your debt-to-income ratio, or your total monthly debts versus your total monthly income, and make sure that it’s not too high. A DTI below 35% is ideal to get the most competitive rates. If you find your DTI exceeds this, you may want to pay down some of your debts first to lower the ratio.
You should also ensure that you have enough money in your bank accounts beyond the down payment and closing costs. Lenders want to see reserves, proof that you are not living paycheck to paycheck.
This is where having a well-funded emergency fund covering at least six months of living expenses can come in handy. If you have to deplete your funds just to make the down payment, then maybe it’s not yet time to buy a house.
2. Compare Rates From The Same Day
Shopping around is a basic rule of thumb when buying just about anything. You want to gather as much information as possible before making a decision. But unlike clothes or shoes, mortgage rates behave more like gas prices: they vary between lenders and fluctuate day to day.
As such, it’s not enough to just compare rates from different lenders. You have to add a time element. A common mistake is comparing a quote from Monday with a quote from Thursday. Instead of gauging which lender has a more competitive rate, you might just be comparing two market days.
To get a true apples-to-apples comparison, you must submit applications to three or more lenders (a mix of big banks, credit unions and online lenders) within a single 24-hour window. This way, you ensure that every quote is based on the same underlying market data.
And don’t worry about your credit score. Multiple inquiries for a mortgage within 45 days will only count as a single hit to your score. Lenders and agencies recognize that you are comparing rates and will only buy one home, they won’t penalize you for it. So shop around aggressively.
3. Optimize Your Credit Tier
Your credit score is another factor that influences the rates you can qualify for. The higher your score, the better the rates you can get. And with mortgages, lenders typically price in 20-point increments.
Check your score and compare it to a lender’s tiers. For example, if you find that your score is 758 and the next tier starts at 760, you can ask the lender to do a simulation or initiate rapid rescoring.
Perhaps you’ve just paid off a loan that’s not yet reflected in your score. Or maybe if you pay off a credit card balance, you can move up a tier and save 0.125% on your mortgage rate. That’s thousands of dollars over a 30-year mortgage.
Don’t be afraid to ask your lender about this. Unlike a traditional credit repair, a credit rescore usually takes less than a week.
4. Negotiate A Buydown
A buydown is a way for you to get a discount through lower rates. But instead of giving you a straight-up price cut on the house, you ask the seller to pay the money upfront to lower your mortgage rate, at least temporarily.
For example, a $10,000 discount on the sale price reduces your monthly payment by only a few dollars. But if you take that $10,000 discount and ask the seller to use it for a buydown, your mortgage rate can be as much as 3% lower.
A common setup is called the 3-2-1 Buydown, where your interest rate is 3% lower in the first year and gradually increases by 1% each year. You only start paying the full mortgage rate in the fourth year. A buydown helps you ease into a mortgage. It also gives you breathing room while you wait for refinancing opportunities.
For the sellers’ part, they do this because it helps them keep the sale price high and maintain good appraisal value. Instead of dropping the price, they essentially subsidize the interest to help close the deal. This way, they benefit from the discount they would’ve probably given anyway.
5. Prepare A Bigger Down Payment
It’s quite simple: The bigger your down payment, the smaller the loan you need to get. This means lower risk for the lender, who might be more willing to give you a lower mortgage rate.
For example, imagine you are buying a $400,000 house with a 30-year fixed-rate mortgage at 6.25%. Even without a lower interest rate, the difference between a 5% and 10% down payment can be more than $24,000 over the life of the loan.
If you make a 20% down payment, you can save more than $70,000 in total at 6.25%, or roughly $350 month. You might also be able to secure a lower mortgage rate, further increasing your savings. And this doesn’t even include the Private Mortgage Insurance savings you get when you reach at least 20%.
Aim for the highest down payment you can afford. Over the life of the loan, you will save tens of thousands of dollars.
Final Thoughts
Small differences in your mortgage rate can add up to significant savings. While you may want to wait for national averages to drop further, they are out of your control. Besides, timing the market is really hard.
You can strengthen your position by using the strategies above. With them, you can potentially beat the national average, even in this market.
For more information and expert guidance tailored to your situation, consider talking to a mortgage broker, loan officer or financial advisor. They can help you review your financial situation, the loan programs available, mortgage rates movements and local market conditions to devise a comprehensive strategy.