The ongoing government shutdown is hindering the economy in numerous ways. Among the most notable: The nation's debt is ballooning. The Treasury Department reported on Thursday that the national debt has exceeded $38 trillion — a previously unattained level of federal indebtedness. While that may seem like a problem outside the scope of your daily life, it could affect the housing market and mortgage rates.

Discover how the government shutdown impacts mortgage rates.

While mortgage rates have been falling lately, if you're still hoping for rates to drop drastically, the likelihood is fading fast.

"We're not going back to the world of 3% mortgage rates, pretty unlikely to get back to the world of 4% mortgage rates," Jeff Tucker, principal economist for Windermere Real Estate in Seattle, told Yahoo Finance in a phone interview. "So instead, we're going to be in a world of higher interest rates for the medium- to long-term."

That's because the increasing U.S. debt "will require a higher yield on the debt to keep financing it, to keep lending to the government essentially," he said. "The most relevant consequence of the higher national debt for the housing market, in particular, is higher borrowing costs in the medium- to long-term."

Here are mortgage rate predictions for the next 5 years.

While 10-year Treasury yields had been near 4% recently, more than one housing market observer believes that Treasury and mortgage rates may already be bottoming out.

The 10-year Treasury is a daily marker for mortgage rates. They generally move in unison with a spread of two percentage points or more between them. For example, if the 10-year yield is at 4%, mortgage rates are near or slightly above 6% as is currently the case.

At the Mortgage Bankers Association’s annual conference in Las Vegas on Monday, former Treasury Secretary Larry Summers predicted the bond market will "hit a wall" sometime in the coming years, and bond yields will begin to move much higher.

Summers said the 10-year Treasury yield could jump 75 basis points within weeks of the bond market transition, and mortgage rates would rise by a full percentage point at the same time.

"I think that's probably the most likely consequence of the path we're on," he added.

MBA chief economist Mike Fratantoni presented his latest economic forecast at the same meeting. He expected mortgage interest rates to remain in the 6% to 6.5% range through the end of 2028.

"As we move over the next couple of years, we think it's more likely that [long-term] rates are going to go up rather than down, given the fiscal pressures on the economy," Fratantoni said.

Discover how mortgage rates are determined.

The national debt is an issue that could affect the housing market and mortgage rates for decades.

An analysis by the Budget Lab at Yale reported that the increasing national debt will move the 10-year Treasury yield 1.4 percentage points higher by 2054. With the traditional spread in Treasury yields and mortgage rates of about 2 percentage points, that could mean home loan rates close to 7.5%.

The Bipartisan Policy Center, a nonprofit think tank, believes the rapidly rising national debt is "bad news for renters, homeowners, and developers alike."

"Debt-driven high interest rates can lead to inflation, which may cause developers to scrap their blueprints and contribute to housing scarcity. It also means that families are left with fewer choices and higher mortgages," BPC wrote in a June report.

Watch for these signs that mortgage rates could go up to 7%.

Windermere's Tucker said the housing market will need to adjust to a new reality.

"Nobody should be buying a home, counting on a plan to refinance down their interest rate by two points in a few years because there's really no guarantee that will happen, and in fact, it looks unlikely that will be available," he said. "Mortgage borrowers should come to terms with being in a world of higher interest rates."

If you're looking to buy a house, maximize your creditworthiness to earn the lowest home loan interest rate you can. Shopping with multiple mortgage lenders can also improve your mortgage rate by a half point or more, according to a new report from Realtor.com.

For homeowners sitting on a large amount of home equity, a refinance might not be the best option if you already have a low mortgage rate. However, a home equity line of credit can let you tap that value — and HELOC rates have been falling recently.

Laura Grace Tarpley edited this article.

The government shutdown impacts various aspects of Americans' financial lives, including the housing market. Home buyers face stalled loan approvals, sellers juggle delayed closing dates, and furloughed federal employees are left wondering how to make the next month’s mortgage payment. Here’s what to know about the impacts — including ways to protect yourself as a homeowner or buyer.

MORE: Read the Yahoo Finance guide for first-time home buyers.

The most immediate impact on the housing market during the shutdown is a slowing of services. “Even with the government shutdown, it’s still possible to obtain a government-backed loan from agencies like the FHA and VA,” Joseph Young, managing director at Mercer Advisors, said in an email interview. “But they’re operating with significantly reduced staff, so processing times and closing dates are likely to be interrupted.”

That slowdown has real consequences. While FHA and VA loan applications may continue processing, any step requiring a manual review or federal verification — income checks or IRS transcripts — could be delayed. And for some buyers, this setback can push a deal past its expiration date.

One loan program in particular, which supports lower-income and rural buyers, has been hit hardest. “USDA loans are the most affected, with a complete suspension of new loans issued,” Young said.

Another hitch for buyers and owners during the shutdown? Flood insurance. The National Flood Insurance Program (NFIP) is currently closed during the shutdown. Without their services, many mortgages can’t close. Analysts at HomeAbroad estimate that 3,600 home closings per day, worth roughly $1.6 billion in daily sales, could be at risk if the NFIP remains closed.

According to the Bipartisan Policy Center, over 700,000 federal workers have been furloughed, and a roughly equal number are continuing to work without pay. Should the shutdown continue, the Center also reports that up to 3 million active-duty military and 750,000 National Guard and reserve personnel may be required to serve without pay. That loss of income is already reshaping local housing markets.

“The psychological toll of the shutdown is already seeping into homebuyer behaviors,” Alex Blackwood, CEO and co-founder of real estate investing platform mogul, said in an interview via email. “With roughly so many federal workers facing suspended pay, regions with heavy federal employment are feeling it most.”

The data back him up. “In the D.C. area, pending home sales are down about 6.7% year-over-year — a much sharper drop than the national average — as would-be buyers pull back amid furlough fears,” Blackwood said. “On the flip side, new listings are up 9.8%, the third largest jump among major U.S. metros, as some locals look to offload their homes.”

For current homeowners, missed paychecks can snowball fast. “If a homeowner has been affected by the shutdown — whether they’ve been furloughed, laid off, or are concerned about a potential job loss — they should reach out to their mortgage servicer right away,” LaQuanda Sain, executive vice president of servicing at Rocket Mortgage, said in an email interview. “Acting early, before missing any payments, can help homeowners stay in control during an uncertain time.”

Most lenders, Sain added, have hardship programs designed for short-term disruptions, including mortgage forbearance or temporary payment adjustments, both of which could be a boon for homeowners struggling with the shutdown.

Learn how to financially survive a job furlough.

If there’s one benefit to the turmoil in Washington, it’s that the government shutdown can lower mortgage rates. During periods of uncertainty, investors tend to buy U.S. Treasurys, pushing yields (and by extension, mortgage rates) down.

“One of the few silver linings in this shutdown is what it’s doing to mortgage rates,” Blackwood said. “We’ve seen rates dip to near their lowest levels of the year. The average 30-year fixed rate recently hovered around 6.3%, a notable retreat from the peaks we saw earlier in the year.”

Freddie Mac’s Primary Mortgage Market Survey confirms the trend, showing the 30-year fixed-rate just below 6.3% in mid-October, its lowest point since late 2024.

Lower rates might help new buyers, but they don’t automatically translate to more mortgage refinancing activity. Many homeowners are still locked into pandemic-era loans with sub-3% interest rates, making refinancing an unappealing option.

Could lenders tighten underwriting standards during times of financial uncertainty? That’s also possible, making refinancing less of a sure bet for some.

“While borrowing costs may soften, financial readiness and agility matter more than ever,” said Young. “Borrowers should have all documentation in order, maintain strong credit profiles, and be poised to act quickly if favorable terms appear.”

Learn 8 strategies for getting the lowest mortgage rate possible.

Even where programs remain operational, backlogs are piling up. Teams at the U.S. Departments of Veterans Affairs and Housing and Urban Development are operating with reduced staff, creating slower underwriting processes and longer closing times.

To minimize problems, Sain suggested buyers should front-load the process. “Homebuyers should share the most up-to-date documentation with their lender upfront, avoiding potential delays caused by documents that require federal retrieval and verification.”

Real estate agents and mortgage lenders are responding with “shutdown contingencies,” or contract clauses that allow extra time if a lapse in federal services delays a deal. But once the government reopens, those delays don’t disappear overnight. Thousands of pending files will be reentered into the system all at once, creating a backlog that could take weeks to clear.

That’s especially challenging for rural and coastal markets where USDA loans and flood insurance are vital. If those pipelines remain frozen, local sales could stall completely.

Not all markets will feel the shutdown equally. In government-heavy regions like Washington, D.C., Northern Virginia, and Maryland, the pause in paychecks is already cooling housing demand.

Rural areas are equally exposed — not because of furloughs but because USDA financing ground to a stop when the shutdown began. And in coastal regions, any lapse in flood insurance can derail a deal entirely. By contrast, metros with more diversified economies and a higher share of cash buyers may weather the shutdown turbulence more easily.

The result? We could be looking at a split market where price growth stagnates in federal-worker hubs while other regions remain relatively steady.

For homeowners already juggling uncertainty, financial flexibility is crucial.

“We're telling clients to refocus on their financial plan — specifically on cash-flow needs and core monthly expenses,” Young said. “It may become necessary to focus on budgeting priorities, really looking at discretionary versus non-discretionary expenses and whether to use savings or alternative options for liquidity.”

Sain’s advice is similar: Act early, stay organized, and keep the line of communication open with your lender. “The earlier you act, the more options you have,” she said.

If you live in a flood zone, double-check your insurance coverage — especially if you’re up for a renewal soon. Additionally, anyone refinancing should ensure that all their flood insurance paperwork is up to date to avoid extra delays when federal verification systems are offline.

Buyers using federal loan programs should expect slower timelines and have a backup plan in place. “HUD continues to process FHA loans, and the VA is still originating loans as well,” Sain said, noting that steps such as underwriting and verification may take longer due to the human nature of those steps.

She noted that Fannie Mae and Freddie Mac operate independently of the federal budget, meaning conventional loans remain largely unaffected. Buyers who qualify for both government-backed and conventional loans might keep a conventional approval ready in case timing becomes an issue.

Despite the uncertainty, Young encourages persistence. “We’re advising clients to stay focused on property identification, document organization, and clear communication with sellers and lenders.”

Blackwood even sees opportunity in the chaos. “People tend to feel most confident investing when things are going well,” he said. “But history shows the best long-term returns are made when conditions feel uncertain. At mogul, we’re seeing strong opportunities to buy high-quality properties at steep discounts as rental demand continues to climb.”

For buyers willing to navigate a slower, more complex process, the uncertainty of this federal shutdown could present a rare opportunity to find value in the current real estate market.

Laura Grace Tarpley edited this article.

A home equity line of credit (HELOC) can be an excellent tool for covering significant expenses, especially if you want to draw money as you go rather than receive the cash in one lump sum. HELOCs are good tools for covering a wide range of expenses. The best home equity line of credit lenders offer low fees, repayment flexibility, great customer satisfaction ratings, and quick closings. But that's not all.

Learn more: Is a HELOC a good idea? Pros and cons to consider.

The Yahoo view: Truist earns our top honors as a HELOC provider due to its high available credit lines and payment flexibility.

Read our full Truist mortgage review.

Key benefits

Truist offers home equity credit lines up to $1 million.

Lets borrowers select interest-only or revolving payments during the draw period.

Allows for a combined loan-to-value ratio (CLTV ratio) of up to 89%. This includes the loan-to-value ratio on your house with your primary mortgage and the amount you want to borrow with the HELOC.

Offers a fixed-rate option with up to five terms to choose from for a $15 fee in most states.

Need to know

There's no required minimum draw except in Texas or for fixed-rate HELOCs.

Truist charges a $50 annual fee in some states.

Learn more: How to use a HELOC to pay off debt (and when it makes sense)

The Yahoo view: Better has much to offer: a high combined loan-to-value ratio, no prepayment penalty, and fast closings.

Read our full Better Mortgage review.

Key benefits

Better offers the flexibility of a HELOC or a lump-sum home equity loan.

Has a CLTV ratio limit of 90% when considering your existing mortgage.

Says it can close on a HELOC in as few as seven days.

Recently launched a Bank Statement HELOC, so borrowers only need to submit bank statements when they apply; this is ideal for self-employed homeowners or others with unique financial situations.

Need to know

Has a minimum initial draw of 75% of the credit line or $50,000, whichever is greater.

Better publishes a detailed list of HELOC closing costs on its website.

The Yahoo view: Navy Federal Credit Union (NFCU) is a customer-satisfaction machine with no annual fee or closing costs for HELOCs. It has the highest lender score on our list, but we didn’t choose it as our top pick because Navy Federal membership is only available to military-affiliated families.

Read our full Navy Federal Credit Union mortgage review.

Key benefits

NFCU ranks above average for customer satisfaction among mortgage lenders, according to the J.D. Power 2024 origination survey. Plus, it tops the list for satisfaction among loan servicers.

Promotes no application, origination, annual, or inactivity fees.

Closes on HELOCs in an average of just five days.

Offers an interest-only payment option.

Need to know.

Allows maximum credit lines up to $500,000.

Most lenders offer a 30-year HELOC term with a 10-year draw period and a 20-year repayment term; NFCU's HELOC has a 40-year term consisting of a 20-year draw period and a 20-year repayment term.

The Yahoo view: Bank of America stands out as a low-fee HELOC lender, offering credit lines up to a cool million dollars and discounts to loyal customers.

Read our full Bank of America mortgage review.

Key benefits

Bank of America charges no application fees, annual fees, origination fees, or prepayment penalties. However, if you close your account within 36 months of opening it, you may have to pay an "early closure fee."

Offers credit lines of up to $1 million.

Bank of America rewards program for existing customers can provide interest rate discounts.

Need to know

Bank of America requires a minimum draw of $15,000 to $25,000.

Has an average HELOC closing time of 50 days.

Does not disclose a minimum qualifying credit score or debt-to-income ratio (DTI).

The Yahoo view: New American Funding beats other lenders to the HELOC finish line, with closings as quickly as in five days. It also has relatively low costs.

Read our full New American Funding mortgage review.

Key benefits

New American Funding says it can close HELOCs in as little as five days.

Does not charge an annual fee.

Need to know

You must withdraw the full amount of your credit line at closing.

Requires a minimum 640 credit score and a maximum 50% DTI to qualify.

Promotes "no out-of-pocket costs." While no clarification is available on its website, that may mean lender expenses are deducted from your credit line.

Read more: How can you use the money from a HELOC?

HELOCs are versatile tools for homeowners with equity, and most providers allow you to draw cash as you need it. That reduces debt and interest costs as well. You can tap it, pay it back — and then circle back whenever you need more cash liquidity in your financial life.

Keep learning: Can you use a HELOC for a down payment on a second home?

A HELOC has two main components: You take out the money (the draw period) and pay it back over time (the repayment period). That means you can borrow and pay back the money during the initial draw period, but you can't access the credit line during the repayment period.

For example, many HELOCs allow 10-year draws and then 20-year repayment periods, although there can be variations.

Consider just how long you want to be saddled with the debt for something you spent money on years and years ago — and the interest you'll pay over what's likely to be 30 years.

You must have some value built into your house to qualify for a HELOC. That usually comes from years of payments and market-price appreciation. With 15% to 20% equity, you'll have enough to apply for a HELOC. As you did with your first mortgage, you'll want to shop around for the best offer.

Getting a HELOC won't be as hard as it was to get a mortgage (we heard that sigh of relief), but there's still some paperwork to do. As always, your creditworthiness comes into play: things like your credit score, existing debt — you know the drill. Be patient. Expect the process to take a few weeks, and then revel in the surprise if it happens sooner.

Read more: How to get a HELOC with poor credit

When shopping for a HELOC, two options may be presented. Here's what you need to know.

It may seem pretty easy to understand an interest-only HELOC. You're not paying the debt down during the draw period; you're just paying interest to the lender. When the draw period ends, your payments are amortized with principal and interest.

One thing to remember: Most HELOCs have adjustable interest rates, so your monthly interest payment is likely to vary.

Some lenders offer fixed-rate HELOCs. You may have to pay a fee to get it, but you'll lock in an interest rate on some or all of your balance for the long term. That's a good idea if interest rates are rising — maybe not so much if rates are expected to go lower.

In our current world of range-bound interest rates, it may be a toss-up. But the lure of an interest rate that won't jump higher can be appealing.

The repayment period on a HELOC can be grueling. You've depleted most of, if not all, your home's equity and now face many years of paying down debt. You might wonder if a HELOC can be refinanced.

If you have already tapped out your home equity, the options may be limited. If you truly have difficulty making the payments, a loan modification may be your best choice.

If you wait, the answer is likely to be yes. The rules are changing. After the 2025 tax year, you may be able to deduct HELOC interest on your taxes regardless of what you used the proceeds for.

Right now, the IRS says you have to spend the money to "buy, build, or substantially improve" your house for the interest to be deductible, up to a limit.

Dig deeper: How to pay off your mortgage with a HELOC

Cashing in on the equity in your house without selling it can be achieved in three additional ways besides using a HELOC.

Qualifying for a home equity loan (HEL) is similar to the process involved with a HELOC. The primary difference is that while you draw from a line of credit as you wish with a HELOC, a home equity loan is delivered in a lump sum of cash. There's no 10-year draw term, so repayment begins shortly after closing and can last from five to 30 years.

One other distinction: While HELOCs usually have variable interest rates with some lenders offering fixed-rate options for a fee, HELs are usually fixed-rate loans from the start.

Dig deeper: HELOC vs. home equity loan

Rather than adding a second mortgage to your home with a HELOC or a HEL, you can trade in your old home loan for a new cash-out refinance. You get the lump sum and make one payment on the new mortgage.

Read more: HELOC vs. cash-out refinance

If you're 62 or older, a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, may be an appealing option. A portion of your equity can be distributed to you in a few ways: as a lump sum, a monthly payment to you, a line of credit, or a combination of a line and a monthly payment.

As you receive that money, interest and debt accrue against the home's value, which is repaid when you move, sell the house, or die.

Learn more: HELOC vs. home equity loan vs. reverse mortgage

A personal loan doesn't draw from your home's equity, but it can put cash in your pocket. And you don't have to put your home up as collateral. However, an unsecured personal loan can mean a higher interest rate.

Personal loans won't usually put tens of thousands of dollars in your pocket, but terms are shorter than HELOCs so your debt won't linger for decades.

Keep reading: HELOCs vs. personal loans

We considered the following mortgage lenders for our HELOC best-of list, but they weren’t quite as strong as our top picks. And some don't offer home equity products.

American Pacific Mortgage

AmeriHome Mortgage

AmeriSave Mortgage

BMO mortgage

Cardinal Financial mortgage

Carrington Mortgage Services

Chase mortgage

Citibank mortgage

Citizens Bank mortgage

CMG Financial mortgage

CrossCountry Mortgage

Embrace Home Loans

Fairway Independent Mortgage

Fifth Third Bank mortgage

Flagstar Bank mortgage

Freedom Mortgage

Guild Mortgage

Huntington mortgage

loanDepot

Movement Mortgage

Mr. Cooper mortgage

Newrez mortgage

PenFed Credit Union mortgage

Pennymac

PHH Mortgage

Planet Home Lending

PNC Bank mortgage

Prosperity Home Mortgage

Rate (Guaranteed Rate) mortgage

Regions Bank mortgage

Rocket Mortgage

SoFi mortgage

TD Bank mortgage

Third Federal Savings & Loan mortgage

U.S. Bank mortgage

USAA mortgage

Veterans United

Wells Fargo mortgage

Zillow Home Loans

In our view, the overall best place to get a HELOC is Truist Bank. You'll also find our other reviewed lenders are worthy contenders and outstanding in one way or another.

The best deals are fleeting and require a hunting instinct. Since interest rates are constantly changing and mortgage lenders are often tweaking available specials, you'll want to keep a few lenders on your radar. Check their websites for limited-time offers. But when you're ready to get rolling with a HELOC, ask your contenders for any unadvertised specials that may be available.

HELOC rates generally range from about 6.2% to a little over 9% right now, with an overall average rate of 8.10%. Rates vary by location, property value, mortgage balance, loan amount, and credit score.

Methodology:

Yahoo Finance reviews and scores HELOC lenders based on: 1) Available products, 2) Fees, 3) CLTV, 4) Closing times, 5) Maximum DTI, 6) Minimum credit scores, 7) Maximum credit line, 8) Minimum draw, 9) Prepayment penalties, 10) Special features, and 11) Customer satisfaction.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

Laura Grace Tarpley edited this article.

Most Americans would probably like to see lower mortgage rates these days. And while the president certainly has a lot of power, even he can’t snap his fingers and make mortgages cheaper for today’s borrowers. What can the president do about mortgage rates, though? Here’s how who’s in office could impact what you pay for a mortgage loan.

Read more: The best mortgage lenders for first-time home buyers

The president of the United States doesn’t directly control mortgage rates. They don’t have the authority to set industrywide interest rates, nor can they legally require lenders to set their rates in a certain manner.

The president does, however, influence rates to some extent. Their appointees, policies, and public statements can affect the 10-year Treasury yield, and mortgage rate trends tend to follow the 10-year yield. They also have a hand in policies that can impact the costs lenders face, and their decisions influence economic factors such as inflation, labor, housing, taxation, and Federal Reserve decisions, among others — all of which play into the interest rates paid by consumers.

The Federal Reserve plays a big role in interest rates. The federal funds rate — which is the rate banks pay to borrow money from each other — is the foundation on which most consumer interest rates are based.

Just think: If a bank is paying more to borrow money, they’ll need to charge customers more as well. Therefore, when the Fed increases its federal funds rate, the rate on most consumer products also tends to rise. When it falls, consumer rates — including mortgage rates — often follow suit.

(Lately, this effect is seen in the weeks preceding an anticipated Fed rate cut, with mortgage rates falling in anticipation of a lower Fed rate, not necessarily after.)

How exactly does the president play a role in all this, though? First, the president nominates the Fed’s chair — the person who reports to Congress on behalf of the Fed, meets with the Treasury secretary, and provides post-meeting commentary to the public. They also nominate the members of the Fed’s Board of Governors.

Both parties play a significant role in shaping the Fed's actions and policies. Although the Senate must ultimately confirm the president’s nominations, it does grant the sitting president some influence over interest rates.

Learn more: How does the Federal Reserve rate decision impact mortgage rates?

Another significant influencer on mortgage rates is the 10-year Treasury yield, which represents the rate at which 10-year Treasury bonds are being paid to investors. Long-term mortgage rates tend to move in the same direction as the 10-year yield, so when the Treasury yield is up, mortgage rates typically also rise. When the yield falls, so do rates.

As with the fed funds rate, the president doesn’t directly influence the Treasury yield. However, the moves made by their Fed appointees, as well as their own public statements, remarks, and policy priorities, do factor in.

Why? Because all of these can heavily influence investor sentiment. For example, if investors fear economic trouble is brewing, they’ll be more tempted to buy into the safety of government bonds, which sends demand for Treasurys up and yields down.

A more stable economy and strong feelings of financial security can have the opposite effect, drawing investors away from Treasurys and into riskier investments. Treasury rates then rise to attract more investment.

The president’s economic policies also have the power to impact the mortgage rates you see. Tax cuts (or increases), for example, affect the amount of pocket money Americans have and, therefore, how much they can contribute to the economy. This directly contributes to inflation and the Fed’s decisions about interest rates.

Other economic policies, such as tariffs, come into play, as they influence the prices consumers pay for various goods and services and, as a result, Americans’ spending and the U.S. inflation rate.

Generally speaking, when inflation is high, the Fed tends to increase rates to tamp down economic activity. When it’s low, it may opt for rate cuts instead. This keeps consumers borrowing and money flowing into the economy.

Dig deeper: How inflation affects mortgage rates

Policies that impact home prices, housing, or supply and demand are another way the president can have a hand in mortgage rates.

Typically, when home buyer demand or housing prices are high, mortgage lenders increase the rates they charge customers. When demand is low or supply is oversaturated, they may lower rates to drum up more business.

Potential policies that could impact supply and demand include:

Tariffs, as they impact the costs home builders face for materials

Homebuilding initiatives, such as former President Biden’s Housing Supply Action Plan

Homebuying incentives, like the proposed First-time Homebuyer Tax Credit

Affordable housing initiatives, which impact what buyers pay for their homes

Even seemingly unrelated policies can impact the housing industry and indirectly affect mortgage rates. Immigration policies, for example, can have a trickle-down effect, particularly if they significantly impact the availability or cost of labor for homebuilders.

Despite recent declines, most buyers and refinancers would probably like to see mortgage rates creep a little lower. Fortunately, waiting for policy changes or Federal Reserve moves isn’t your only option.

In fact, there are several strategies you can use to get a lower mortgage rate all on your own. Here are some options:

Increase your credit score: Mortgage lenders usually reward higher credit scores with better interest rates, because a high score communicates that you’re more likely to make your payments. To improve your score, pay down your debts, make on-time bill payments, and keep your oldest accounts open to increase your credit age.

Buy discount points: Buying mortgage discount points essentially means purchasing a rate reduction. You pay a set fee per “point” at closing, which directly lowers your mortgage rate by a fractional amount. You’ll enjoy this lower rate for your entire loan term.

Consider a temporary rate buydown: This is similar to buying points, though the lower rate only lasts for a few years or less. You may receive a lower rate for the first one, two, or three years of the loan, after which your rate will revert to your originally quoted rate (or you can refinance). While you may have to pay for the buydown, this cost is often covered by the seller, lender, or homebuilder.

Shop for the best mortgage lender: Rates vary by mortgage lender, so be sure to obtain quotes from at least three or four lenders. According to Freddie Mac, getting quotes from at least four lenders can save you over $1,200 per year.

Making a larger down payment can also help you get a lower interest rate, but be careful about dipping too much into savings. You’ll want a solid emergency fund on hand to cover repairs and home maintenance needs as they arise.

Mortgage rates are determined by several factors, including Federal Reserve policy, inflation, the employment market, economic growth, and the 10-year Treasury yield. Your individual credit score, down payment, debts, and other financial factors also play a role.

Mortgage rates often drop when inflation falls, home-buying demand slows, the economy cools, or 10-year Treasury yields decline.

The 3% mortgage rates seen during the peak of the COVID-19 pandemic were a result of extreme actions taken by the Federal Reserve, which lowered the federal funds rate to near zero to stimulate economic activity. Unless another economic crisis of this magnitude occurs, super-low rates like these are unlikely to be seen in the future.

Laura Grace Tarpley edited this article.

Mortgage rates decreased in anticipation of a Federal Reserve rate cut on Sept. 17, but rates didn’t continue to fall after the Fed meeting. They’ve held fairly stagnant over the last month. Interest rates are unlikely to decrease significantly before the end of 2025, even if the Fed keeps lowering its rate, so how can you get the lowest mortgage rate possible?

MORE: Read about the best mortgage lenders for first-time home buyers.

Analysis by Yahoo Finance of nearly 5,000 mortgage lenders reporting 2024 loan information under the Home Mortgage Disclosure Act reveals the surprising truth: the lenders offering the lowest mortgage rates.

Unfortunately, the results won't help the typical borrower.

By and large, the mortgage lenders who offered astonishing, rock-bottom mortgage rates made a tiny number of loans — no doubt allowing drastic rate concessions to a small slice of preferred customers. We're talking median interest rates from 2.4% to 4.75%, which are made by lenders underwriting loans to as few as a handful of customers.

Other lenders offering the absolute lowest mortgage rates in 2024 were banks catering to select clientele, credit unions serving local members, and homebuilders financing their own construction.

So, what if you aren't buying new construction from a lender offering a buydown, a member of a credit union willing to offer below-market-rate loans, or an affluent investor with a million-dollar portfolio?

Here are eight strategies to get the lowest mortgage rates with the cheapest home loan you can qualify for — all while using a regular, more well-known mortgage lender.

You may already know that mortgage rates vary by credit score. Whenever you boost your credit score from a lower to a higher tier, you save money.

For example, the entry-level FICO Score of 620 might earn you an annual percentage rate, or APR, of 7.59% (based on mortgage rates as of early October, with the purchase of one discount point). Raise your score to the next credit band of 640 to 659, and your interest rate could improve to 7.43%.

Bigger rate discounts are offered as you climb the credit score ladder. Here are the interest rate breaks as shown by MyFico.com's Loan Savings Calculator:

Find out what credit score you need to buy a house.

The amount of recurring monthly debt you carry when applying for a mortgage is another significant factor in the interest rate you'll earn. The more debt, the higher your mortgage rate.

To get the lowest mortgage rate, aim for a DTI of 25% or less. To calculate your debt-to-income ratio, divide your total monthly debt by your monthly income before withholdings. For example, say you need $700 for monthly rent, $300 for a vehicle loan, and $100 in student loan payments. That's $1,100. With a monthly gross income of $5,000, your DTI is 22%.

1100 / 5000 = 0.22

You're in the pocket for a lower mortgage rate. Mortgage lenders may consider DTIs up to 50%, but prefer 35% or less — and the lowest mortgage rates go to borrowers with DTIs of 25% or less.

Another best practice for getting the lowest mortgage rate is to make as much of a down payment as you comfortably can. While you can get a home loan with as little as 3% down, paying more upfront will earn you a lower mortgage rate.

For first-time home buyers, the median down payment was 9% in 2024, according to the National Association of Realtors.

Prepaying interest to lower your ongoing mortgage rate, called buying discount points, gains popularity in times of higher interest rates.

Buying one point equals 1% of the loan amount and will generally reduce your interest rate by one-quarter of a percentage point. Any number of points can be purchased and applied in fractional amounts too.

However, it's a good idea to calculate the up-front cost of buying points and compare that with the discount you receive on your long-term interest rate. Other factors to consider in this calculation include how long you expect to live in the home and your down payment.

Lenders sometimes add a point or two to a mortgage proposal to make their offered interest rate appear more enticing. But remember, you're actually paying for the discount with an up-front fee.

When shopping for a loan, compare loan offers with zero points. Then, you can decide how many points to buy, if any, to lower your interest rate.

Here's a surprising fact: In a Zillow survey of home buyers over seven months of 2024, about 45% obtained a mortgage rate below 5% — when rates were above 6.5%, like they are now.

How? One-third were successful in negotiating special financing with the home seller or builder. More than one-quarter got a rate buydown from the seller or builder (see below). Nearly a quarter (23%) bought discount points, as we've just mentioned.

If mortgage rates are near 6% and you want to get below 5%, you'll need to buy four to five discount points. (Remember, each point you buy reduces your interest rate by approximately a quarter of a point.)

For example, one point on a $300,000 mortgage would equal $3,000. If you want to purchase five points, you'll likely pay $15,000. You will want to discuss your point-buying strategy with your lender to ensure it gets your long-term loan rate to your target.

Learn when mortgage rates could go down.

Borrowers can lower their mortgage interest rate for the first few years of the loan term with a buydown. Home builders, sellers, and some lenders sometimes offer an interest rate buydown to boost sales. However, it is a rare option among mortgage lenders.

For national mortgage lenders with buydown programs, check out Guild Mortgage and AmeriHome Mortgage.

For example, a buydown might lower your interest rate from 7% to 6.5% for two years. It can be a good deal if the company offering the buydown isn't making it up with fees somewhere else.

While you get a short-term break on the interest rate, your payments and total interest may actually be higher over the long term. Buying down your interest rate is a strategy that requires running the numbers on the long-term benefits.

If you're interested in a buydown, compare a mortgage both with and without a buydown. Lenders will qualify you based on the permanent interest rate, not the temporary buydown rate. Finally, be prepared for your monthly payment to rise at the end of the buydown’s discount period.

A mortgage product that increases in popularity whenever rates begin to rise is back: the adjustable-rate mortgage.

ARMs have a fixed interest rate for an introductory period, often three to 10 years, and then the rate changes regularly, usually once or twice a year. Tips when shopping for an ARM:

Look for an introductory rate that is lower than a fixed-rate mortgage.

Choose a term you feel comfortable with, perhaps in line with how long you plan to stay in the home.

Ensure you budget for potential increases in your monthly payment if the interest rate rises after the introductory fixed-rate period ends.

In the past, it was common to find ARMs with introductory rates well below the prevailing long-term fixed interest rate. An ARM could be a good idea today, but the intro rate isn't always lower anymore. You'll have to shop diligently — and bravely negotiate.

Determine how to choose between an adjustable-rate vs. fixed-rate mortgage.

Are you looking for an interest rate that never changes and allows you to build home equity faster? Consider a shorter-term loan. Mortgages with 20- or 15-year fixed terms, as opposed to the traditional 30-year term, typically come with lower interest rates.

However, since the term is shorter, monthly payments tend to be higher.

An assumable mortgage allows you to take over the remaining payments of an existing home loan. You would likely make a lump sum payment to the current owner to cover the value of any equity or for a profit. That would require you to have the needed cash on hand or perhaps get a loan.

As tempting as it might be to pick up a low-interest-rate assumable loan, most conventional mortgages aren't eligible. That means you would need to find a seller with an FHA, VA, or USDA loan.

Since mortgage rates are constantly changing, and each lender's rate varies, the lowest mortgage rate you can earn requires some research. You will want to know your credit score, debt-to-income ratio, and the amount of your down payment.

With that information, you can begin contacting lenders. Knowing generally where you want to buy a house and how much it will cost, you can gather rate estimates based on your creditworthiness.

Once you have two or three contenders, you can apply for preapproval with each and get a more exact mortgage rate.

Read about the 6 tips for choosing the right mortgage lender.

Recently, home loan interest rates have been in the low-to-mid-6% range. Many (71.3%) of existing homeowners have a mortgage rate below 5%, and over half (53.4%) have a rate below 4%, according to Realtor.com. So, refinancing is not an option for many homeowners right now.

However, owning a home is a long-term commitment, and mortgage rates are very cyclical. Just because mortgage rates are above historic lows doesn't mean a refinancing opportunity will not present itself some years down the road.

After you move in, keep an eye on interest rates. Look for a dip of about 1% to 2% below your current mortgage rate before refinancing. Just remember — there will be refinance closing costs, and you need to decide if your goal is to lower your monthly payment or to pay off your home sooner.

The lowest mortgage rate ever on a 30-year loan was 2.65% in January 2021, according to Freddie Mac. It takes dramatic and systemic financial stress to shock mortgage rates to such a low level. COVID-19 was just that. Some 15 months later, mortgage rates were up to 5%.

Never say never — but it's unlikely that mortgage rates will go back down to 3%. A drastic event (like the COVID-19 pandemic) would have to occur again for rates to drop this low.

VA loans, especially 15-year VA loans, usually have the lowest mortgage rates because shorter terms have lower rates than longer terms.

Laura Grace Tarpley edited this article.