Can You Negotiate Mortgage Rates?

Learn if you can negotiate mortgage rates and how to do it successfully. Read on for expert advice to secure the best deal on your mortgage.

April 6, 2024
Can You Negotiate Mortgage Rates?

You can negotiate to get a competitive insurance rate or a car loan interest rate, but can you also negotiate a lower interest rate on a mortgage? The answer is not just yes and not even just a resounding yes. Rather, negotiating may be the only surefire way to improve upon your current mortgage rate. But before you go into a lender’s office ready to broker a deal, you’ll need to know precisely what mortgage rate negotiation entails. 

Learning the skill of mortgage rate negotiation may prompt even more questions, like “Can you refinance a fixed rate mortgage?”. Keep reading for everything you need to know about negotiating the best mortgage rates and more. 

Understanding Mortgage Rate Negotiation

While negotiating your mortgage rate is possible, only some homeowners actually take advantage of this money-saving strategy. In fact, as of a recent survey, only 39 percent of American homeowners have reported negotiating their mortgage rate.1 This may be because negotiating a rate with a mortgage lender is a bigger challenge than talking a seller down to a lower sale price. Therefore, effective mortgage rate negotiation will require you to prove your creditworthiness. 

As you approach this process, it's important to remain confident and remember that mortgage lenders are competing for your business—not the other way around. By clearly understanding how mortgage rates are determined and what lenders look for in a borrower, you give yourself the best odds of negotiating a lower mortgage rate. As we’ll discuss, learning the skill of negotiation can help you navigate how to lower your monthly mortgage payment.

Factors That Influence Mortgage Rates

You can think of mortgage rate negotiation as negotiating a lower interest rate for your car –– just on a much larger scale. Despite the fundamental similarities between the two, however, the value of a home loan means there are more variables at play. Make sure you understand these key factors and the impact they can have on the mortgage rate offered to you. 

  • Credit Score: Lending, no matter the product, is a risky business. That is, businesses succeed by carefully calculating the risks involved in every single decision. Your credit score is effectively a composite sketch of your credit history, comprising your payment history, debts owed, length of credit history, recently added lines of credit, and the various types of credit used. When you apply for a mortgage rate, a higher credit score signals to lenders that offering you financing is a lower risk –– thus potentially leading to a better rate and giving you some negotiating power. 
  • Down Payment: The size of a home loan directly correlates to risk; the larger the loan, the less protection lenders may have in the event a borrower defaults. Jumbo loans, for example –– loans of more than $766,550 –– cannot be guaranteed by federally backed mortgage companies Fannie Mae and Freddie Mac, putting the onus on the lender.2 Raising your down payment can't help you avoid a jumbo loan. However, it can help you decrease the loan-to-value ratio. This refers to the loan amount compared to the home’s value. The lower the LTV, the less risky the loan is in the eyes of a lender, and the more favorable your rate may be. 
  • Loan Type and Term: Different loan varieties (like fixed-rate, adjustable-rate, FHA, VA, and the aforementioned jumbo loan) and terms (15-year, 20-year, 30-year) will all come with their own rates. Short-term loans generally have lower interest rates but higher monthly payments on account of the reduced payment timeline. Longer-term loans, on the other hand, typically feature higher rates but more manageable monthly payments. Variable interest rates may seem like an appealing option, but they can ebb and flow with current market conditions –– making them too unpredictable for some borrowers. 
  • Current Market Conditions: On the subject of market conditions, this is yet another variable influencing mortgage rates. We’ve seen mortgage rates fluctuate in the past several years based on broader economic indicators like inflation rates and the Federal Reserve's interest rate strategy. Staying in the loop about current market conditions can help you anticipate changes in mortgage rates so that you strike at the right time and maximize your chances of scoring a lower rate. 
  • Property Type and Location: Mortgage rates are also influenced by the type of property you’re buying. Single-family homes will have rates different from multi-family or investment properties –– which may carry greater risk in the eyes of mortgage lenders. Further, a property’s location can significantly impact the rates offered by lenders. This can mean variation from state to state but also from rural areas to urban areas.3

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How to Prepare for Negotiation

Knowing the factors that influence mortgage rates is only one piece of the puzzle –– how you deploy these different factors as part of your negotiation strategy will make the most impact. 

1. Improve Your Credit Score

Unless you’re buying a home entirely with cash, your credit score will be one of the single most important determining factors when it comes to getting the best mortgage rate.4 By the same token, improving your credit score is one of the best ways to tip the negotiating scales in your favor. 

The process of raising your credit score begins with knowing your current score and understanding the factors propping it up (or dragging it down). Credit reports are often available for free, and you should take the time to review yours while looking for inaccuracies, errors, or potential fraud indicators. Once you’ve pinpointed the problem areas holding you back, make a rehabilitation plan –– whether that means paying all your bills on time, eliminating your debts, or reducing your existing lines of credit by consolidating debts. 

Elevating your credit score isn’t an overnight job. Rather, it will take months, maybe even a year (or more) to arrive at a score with serious negotiating power. Give yourself plenty of time and work diligently toward your desired score to best prepare for your mortgage rate negotiation. 

2. Work on Saving for a Larger Down Payment

Like building your credit score, gathering a large down payment can dramatically improve your negotiating position. Also, like raising your credit, the process of saving up 20 or 30 percent of the purchase price of a home can be a lengthy one. A down payment of 20 percent or more both shows lenders that you are financially responsible and circumvents the need for private mortgage insurance (PMI), which can add hundreds to your monthly expenses.5 This means that, with the right down payment, you can enjoy dual savings: potentially thousands less in interest payments and just as much in monthly payments for PMI. 

Depending on your financial situation, saving for a larger down payment will either be a short- or long-term goal.

3. Do Your Homework

Whether this is your first real estate rodeo or you’re a seasoned homebuyer, the process can range from tedious to downright confusing. For this reason, it’s important that you prepare for mortgage rate negotiation by learning as much as you can about current rates, local real estate trends, and the factors that determine mortgage rates that we mentioned above. Like going to a mechanic or a car dealership, knowledge is both your greatest weapon and your strongest defense. 

Strategies for Negotiating Lower Rates

You’ve done the work and conducted your research, ensuring you’re as prepared as possible to negotiate your mortgage rate. Here are some tried-and-true negotiating tactics for when you’re ready to broker the best deal: 

  • Time it Right: Sometimes, whether you’re getting the best mortgage rate can come down to your timing –– but there’s more than one time to negotiate your rates: when you buy a home and if/when you decide to refinance. For this reason, you should keep a close eye on interest rates when you’re searching for a home, staying current on these rates when it comes time to consider refinancing. 
  • Shop Around for the Best Rate: If tasked with determining the four most powerful words when negotiating your rate, we’d submit: “I’m looking at multiple lenders. ” Going into mortgage rate negotiations with quotes from different lenders shows that you’re A) serious and B) ready to walk away if they can’t present you with a compelling offer. Researching to compare rates and find the best mortgage lenders may add some extra time to your home-buying timeline. But in this case, time is quite literally money
  • Polish Your Application: You might be charming, personable, and well-liked, but negotiating the best mortgage rate comes down to how good you look on paper. Your credit score/history and down payment will play a key role here, as these hard figures directly correlate to the risk a would-be lender is taking on. 
  • When in Doubt, Ask for a Deal: While we may have created a push-pull power dynamic between lenders and homebuyers, these two parties generally share the same fundamental goal. Lenders want to help you purchase a home –– you just have to show them it’s worth it. If you’ve done the work to assemble a compelling loan application and things are looking good, simply ask for a better deal. After all, the worst they can say is “no”!  
  • Consider a Mortgage Broker: If shopping around for the best deal proves to be too much work, or if you want the best shot at finding a good deal courtesy of someone who knows the ins, outs, ups, and downs of mortgage rates, you may want to consider working with a mortgage broker. These professionals consider your unique information before pounding the pavement for mortgage rates that meet your needs, serve your goals, and –– hopefully –– save you money. 

When to Lock in Your Mortgage Rate

Waiting for the best mortgage rate can be a gamble. As the Kenny Rogers song goes, “You’ve got to know when to hold ‘em, know when to fold ‘em, and know when to walk away.” When it comes to mortgage interest rates, there’s a time for negotiating –– and there’s a time to accept the best deal and lock in your rate. A mortgage rate lock allows you to pin down an interest rate, protecting you from market fluctuations that can drive rates up. But just as locking in can protect you from unfavorable shifts, it can prevent you from potentially getting a better deal if rates go in the opposite direction.6

For this reason, choosing when to lock in your mortgage interest rate is a critical decision. Your best bet in locking in at the right time will be to monitor market conditions closely. If rates look like they’re on a downward slope, you may want to hold off on locking in your rate. But if economic indicators show rates on the rise, your best bet may be to lock in your rate. After all, even a quarter of a percentage point can equal tens of thousands in the long run.

Truehold’s Role in Your Mortgage Rate Negotiation

Whether you choose to lock in at the current rates or wait for rates to drop, proper timing is one of the best strategies out there to improve your mortgage payment. With time, you can devote the necessary energy to improving your credit score. You can craft a comprehensive budget to save for a sizable down payment. And you can conduct all the research needed to go into your negotiations both informed and prepared. If you’re an existing homeowner shopping for mortgage rates on your next property, Truehold can give you all the time you need. 

Truehold’s sale-leaseback differs from a traditional sale in that, rather than selling your house and immediately moving into a new one, you can continue living in the home as a renter. This means you have your hard-earned home equity from the sale, along with the flexibility to shop, save, and strategize ways of becoming a master negotiator. This approach won’t be right for everyone. But for many homeowners in Ohio, Missouri, Kentucky, Oklahoma, Indiana, Pennsylvania, and now Texas, Truehold’s sale-leaseback has made all the difference. 

So, if you’re wondering how to pay off your mortgage faster or get rid of it altogether, connect with a Truehold advisor and get a cash offer on your home within 48 hours. 

Securing the Best Mortgage Rate

In summation: Yes, you can negotiate a better mortgage rate, but doing so effectively requires preparation, patience, and persistence. Armed with the above information and Truehold’s sale-leaseback, however, you give yourself the greatest odds at securing the best mortgage rate and saving potentially tens of thousands of dollars over the course of your loan.   

Visit our resource library for more resources dedicated to helping Americans navigate the home-buying process –– and to see the difference Truehold has made in many homeowners’ lives.   


  1. LendingTree. Although 63% of Homebuyers Have Negotiated the Purchase Price, Only 39% Have Negotiated the Mortgage or Refinance Rate Despite the Likelihood of a Better Deal.
  2. NerdWallet. Jumbo Loans: When a Regular Mortgage Isn’t Enough.
  3. Consumer Financial Protection Bureau. Seven factors that determine your mortgage interest rate. 
  4. Bankrate. What credit score is needed to buy a house?
  5. Investopedia. How to Avoid Paying Private Mortgage Insurance (PMI). 

Nicolas Cepeda headshot
Written by
Nicolas Cepeda
Financial Analyst at Truehold - A Specialist in Real Estate Finance
Nicolas Cepeda specializes in financial analysis and strategic portfolio management, with a keen focus on innovative residential real estate solutions. He leverages this expertise to cover pertinent topics in the real estate and financial sectors.
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Truehold's blog is committed to delivering timely and pertinent insights in real estate and finance, purely for educational and informational purposes. Crafted by experts, our content is thoroughly reviewed to guarantee its accuracy and dependability. Although designed to enlighten and engage, our articles are not intended as financial advice and should not be the sole basis for financial decisions. Our stringent editorial practices ensure the integrity of our content, empowering our readers with valuable knowledge.

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