How do you get the lowest mortgage rate?

The lowest mortgage rate goes to borrowers with the strongest credit score, lowest loan-to-value ratio, lowest debt-to-income ratio, and who compare offers from multiple lenders on the same day. Paying discount points can further reduce your rate if you plan to stay in the home long enough to recoup the upfront cost.

Your mortgage rate is not a fixed number — it is the output of several variables that lenders price into every loan. The same house, with the same loan amount, can come with materially different rates depending on your credit profile and which lenders you approach. The CFPB recommends comparing offers from at least three lenders to find the best rate available.

The five factors that determine your rate

Credit score: The most impactful single factor. Fannie Mae and Freddie Mac's Loan-Level Price Adjustments (LLPAs) apply rate surcharges that increase as credit scores decrease. A borrower at 760+ often pays 0.25%–0.75% less than a borrower at 680 on the same loan, per CFPB credit score guidance. Raising your score before applying is the highest-leverage action available.
Loan-to-value (LTV): The lower your LTV (more equity or larger down payment), the lower your rate. At 80% LTV or below, you also avoid PMI on conventional loans. Lenders view lower LTV as lower default risk and price it accordingly.
Debt-to-income ratio (DTI): A lower DTI signals stronger repayment capacity. Borrowers with DTI well below the 43% qualified-mortgage threshold may receive better pricing at some lenders.
Loan type and term: 15-year mortgages carry lower rates than 30-year loans — Freddie Mac's PMMS historically shows a 0.5%–0.75% gap. Government-backed loans (FHA, VA, USDA) have different rate structures than conventional loans.
Lender competition: Rates are not uniform across lenders. Origination costs, secondary market relationships, and business strategy all differ. Shopping multiple lenders is the only way to determine which offers the best rate for your specific profile.

Actions to take before you apply

Raise your credit score if you have time. Pay down revolving balances to reduce utilization below 30%. Dispute any errors on your credit reports (available free at AnnualCreditReport.com). Avoid opening new accounts or applying for new credit in the 3–6 months before your mortgage application.
Increase your down payment if possible. Moving from 10% to 20% down eliminates PMI and typically lowers your rate. Even moving from 5% to 10% down shifts you into a better pricing tier.
Pay off high-balance debt to lower DTI. Paying off a car loan or reducing credit card balances lowers your back-end DTI and may improve your rate tier at lenders that price DTI explicitly.
Choose a shorter loan term if the payment is manageable. A 15-year mortgage will carry a lower rate than a 30-year on the same loan amount — though the monthly payment will be higher.

How to shop for the best rate

Request Loan Estimates from at least three lenders on the same day for the same loan amount, term, and down payment. Comparing Loan Estimates side by side allows you to evaluate the total interest percentage (TIP) — the comprehensive cost measure on page 3 — rather than just the quoted rate. Multiple mortgage inquiries within a 45-day window are treated as a single inquiry under FICO scoring rules, so rate shopping does not materially hurt your credit score. Use the CFPB's rate checker to see the rate range real borrowers receive in your state based on credit score and down payment.

Discount points: buying a lower rate

Discount points let you pay upfront cash at closing to permanently reduce your interest rate. One point costs 1% of the loan amount and typically reduces the rate by 0.125%–0.25%, depending on market conditions. The CFPB explains this tradeoff clearly: paying points makes sense only if you stay in the home long enough for the monthly savings to exceed the upfront cost. On a $350,000 loan, one point costs $3,500. At a 0.25% rate reduction, monthly savings are roughly $55. Break-even: ~64 months (about 5.3 years). If you plan to sell or refinance before break-even, don't pay points.

Rate vs. APR: comparing the true cost

When comparing lenders, use the Annual Percentage Rate (APR), not just the stated interest rate. The CFPB explains that APR incorporates the interest rate plus lender fees and points, giving you a more accurate measure of total borrowing cost. A lender quoting a lower rate with high origination fees may actually cost more than a lender with a slightly higher rate and lower fees — APR reveals that difference.

Sources

The CFPB recommends getting Loan Estimates from at least three lenders to find the best rate available for your specific loan. — CFPB — How Do I Find the Best Loan Available?
Discount points (prepaid interest) can lower your mortgage rate; whether paying points makes financial sense depends on how long you keep the loan. — CFPB — Lender Credits and Discount Points
APR incorporates the interest rate plus lender fees and points; it is the more comprehensive measure of mortgage cost when comparing offers. — CFPB — Interest Rate vs. APR
Freddie Mac's Primary Mortgage Market Survey tracks weekly average 30-year and 15-year fixed mortgage rates nationwide — the benchmark for evaluating whether a quoted rate is competitive. — Freddie Mac PMMS
Credit score is a primary determinant of mortgage rate; lenders use FICO scores to set pricing adjustments that vary by score tier. — CFPB — What Credit Score Do Mortgage Lenders Use?

Key takeaways

Credit score is the highest-leverage factor: raising your score before applying is the single most impactful action.
Lower LTV (larger down payment) reduces your rate and eliminates PMI at 80% LTV or below.
Get Loan Estimates from at least 3 lenders on the same day — multiple inquiries within 45 days count as one for FICO purposes.
Compare APR, not just the stated rate — APR captures fees and points in one number.
Discount points reduce your rate permanently; only pay them if you'll keep the loan past the break-even point (typically 5–7 years).

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