How to get the lowest mortgage rate possible in 2026

Core Insights - Mortgage rates are currently lower than at the beginning of 2025, presenting opportunities for borrowers to secure rates below the national average in 2026 housing market [1] Group 1: Mortgage Rate Analysis - Analysis of nearly 5,000 mortgage lenders in 2024 indicates that the largest national banks, credit unions, and homebuilders offering their own financing provided the most favorable home loan rates [2] - Existing homeowners have a significant percentage with mortgage rates below 5% (71.3%) and over half (53.4%) below 4%, making refinancing less appealing for many [23] Group 2: Strategies for Securing Low Mortgage Rates - Improving credit scores can lead to lower mortgage rates, with a FICO Score increase from 620 to 640 potentially reducing the APR from 7.26% to 7.09% [5][6] - Aiming for a debt-to-income (DTI) ratio of 25% or less is recommended for obtaining the lowest mortgage rates, as lenders prefer DTIs of 35% or less [7][8] - Making a larger down payment can also help secure a lower mortgage rate, with the median down payment for first-time buyers being 9% in 2024 [10] - Buying discount points can reduce ongoing mortgage rates, with one point typically lowering the interest rate by a quarter of a percentage point [11][12] - Interest rate buydowns, though rare, can temporarily lower mortgage rates, often offered by home builders or sellers [16][17] - Adjustable-rate mortgages (ARMs) are gaining popularity as they can offer lower initial rates compared to fixed-rate mortgages [19] - Shorter-term mortgages (15 or 20 years) generally come with lower interest rates compared to the traditional 30-year term [21] - Assumable mortgages allow buyers to take over existing loans, but are typically limited to specific loan types like FHA, VA, or USDA loans [22]