Buyers Can Find Better Rates by Shopping, Saving & Strengthening Credit

When mortgage rates surpassed the 7% threshold for the initial occasion since January 2025, attaining a peak not witnessed in twenty months, a comprehensive Realtor.com analysis revealed that the publicized rate represents merely one component of the broader affordability narrative.

Drawing upon information derived from over 1.35 million acquisition loans executed between January 2023 and December 2025, the research demonstrates that borrowers operating within an identical headline-rate environment may obtain substantially divergent mortgage rates contingent upon their financial circumstances and the strategic decisions they implement throughout the loan origination process.

“Mortgage-rate headlines matter, but they are not the whole story,” said Jake Krimmel, Senior Economist at Realtor.com. “Our report finds that borrowers’ actual rates vary widely even within the same month, and that the gap between a typical outcome and a strong one can translate into tens of thousands of dollars in purchasing power. A buyer’s credit profile, down payment and lender choice all help determine where they land within that range.”

Shopping for the Best Affordability

In an environment characterized by heightened mortgage rates that are constraining housing affordability, this recent analysis identifies actionable strategies that prospective buyers can implement to enhance their financial position:

• Initiate credit preparation in advance: Purchasers with sufficient preparation time should prioritize achieving credit scores above 700 and 720, where the research demonstrated the most substantial rate reductions.
• Explore alternatives to the conventional 20% down payment benchmark: While accumulating 20% down eliminates private mortgage insurance requirements, a 10% down payment threshold similarly produces meaningful rate improvements for buyers unable to reach the 20% threshold.
• Conduct comprehensive lender comparisons: Evaluating proposals from multiple lending institutions presents an immediate avenue for rate optimization, with the analysis indicating approximately 19 basis points in rate differential between standard and highly competitive retail lenders.
• Evaluate comprehensive mortgage expenses: Interest rate represents merely one factor affecting overall affordability. Prospective buyers should carefully examine private mortgage insurance premiums, origination fees, and potential discount points in conjunction with the quoted interest rate.

In the event that the median borrower obtained a 7% interest rate, some 50% of borrowers would fall within the range of 6.73% to 7.21%, representing a 48-basis-point differential. The central eighty percent would be offered rates spanning from 6.50% to 7.43%, constituting a 93-basis-point differential equivalent to approximately $28,400 in home valuation based on a $2,000 monthly principal-and-interest payment. This rate distribution among borrowers during a single month exceeds the typical fluctuation range of headline rates observed across most three-month intervals.

Credit score demonstrated the most substantial independent influence on borrower rates, though enhancement requires considerable time. Throughout the period from 2023 to 2025, surpassing the 700 and 720 credit-score benchmarks resulted in rate reductions of approximately 5.5 basis points respectively, whereas advancing from the 680s to 720 yielded approximately 11 basis points in savings—equivalent to roughly $3,200 in additional home valuation on a $2,000 monthly principal-and-interest payment. The comprehensive progression from below 640 to 780 or higher corresponded with a 32-basis-point enhancement, translating to approximately $10,100 in home price advantage.

“Buyers who have time before they plan to purchase should focus on the credit-score thresholds that matter most, especially 700 and 720,” Krimmel said. “Improving a score can take planning, but even a move from the high 600s to 720 can improve the rate a buyer is likely to receive and expand the home budget available to them.”

The selection of down payment amounts influences mortgage rates, though frequently not in the manner that purchasers anticipate. Advancing from a 15% to 19% down payment to precisely 20% down resulted in a marginal rate reduction of approximately 0.7 basis points. The more substantial financial advantage at this particular threshold derives from the elimination of mortgage insurance, which indicates that purchasers should evaluate comprehensive monthly housing expenditures rather than focusing exclusively on the interest rate.

For purchasers making down payments below 20%, increasing from 5%–9% down to 10%–14% produced a rate decrease of 5.5 basis points, representing the most significant single improvement below the 20% threshold. Beyond 20%, rate enhancements persisted through approximately 35% down, with the cumulative difference between 20% and 40%-or-greater down equaling 17.5 basis points, or roughly $5,400 in home valuation on a $2,000 monthly principal-and-interest payment.

“Twenty percent down is still an important financial benchmark because it ends mortgage insurance, but buyers should not assume it produces a large rate drop on its own,” Krimmel said. “The right target depends on the buyer’s full financial picture: how much cash they need to preserve after closing, the monthly cost of mortgage insurance and the rate benefit from additional money down.”

Among the variables examined, engaging in lender shopping presented the most direct pathway for borrowers to secure improved rates. Throughout 2025, mortgage brokers and correspondent lenders typically offered pricing approximately 5 to 6 basis points lower than retail lenders when adjusting for borrower attributes, transaction timing, and geographic location.

“For buyers who are ready to move now, comparison shopping is the clearest opportunity,” Krimmel said. “A strong lender offer can be worth roughly twice as much as moving from a 690 to a 720 credit score, and it is available immediately for buyers who are able to search. Buyers should seek multiple loan estimates, compare the full terms—not just the advertised rate—and give themselves enough time to choose the lender that best fits their needs.”

Significantly, borrowers who compared rates among retail lenders could identify meaningful rate differentials: a highly competitive retail lender outperformed the Freddie Mac benchmark rate by roughly 17 basis points, whereas a standard retail lender exceeded it by approximately 2 basis points. The variance between a standard retail lender and a highly competitive retail lender amounted to approximately 19 basis points, representing approximately $5,800 in additional purchasing capacity based on a $2,000 monthly principal-and-interest payment allocation.

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