How to Improve Your Mortgage Rate: 7 Proven Strategies

October 18, 2025 • 6 min

Even a small improvement in your mortgage rate can save you tens of thousands of dollars over the life of your loan. Here are seven proven strategies to qualify for the best possible rate in Massachusetts.

1. Improve Your Credit Score

Your credit score is the single biggest factor in determining your mortgage rate. Here's how scores typically affect rates:

  • 760+: Best rates available
  • 700-759: Good rates, 0.25-0.5% higher
  • 680-699: Average rates, 0.5-0.75% higher
  • 620-679: Higher rates, 0.75-1.5% higher
  • Below 620: May need FHA or special programs

How to improve: Pay bills on time, reduce credit card balances below 30% of limits, dispute errors on credit reports, and avoid opening new accounts before applying.

2. Increase Your Down Payment

Larger down payments mean lower rates. Here's why:

  • 20%+ down: Best rates, no PMI
  • 15-19% down: Good rates, lower PMI
  • 10-14% down: Average rates, higher PMI
  • 3-9% down: Higher rates, maximum PMI

Use our down payment calculator to see how different down payment amounts affect your monthly payment.

3. Lower Your Debt-to-Income Ratio

Lenders want to see that your total monthly debts (including the new mortgage) don't exceed 43% of your income. Lower is better:

  • Below 36%: Excellent, best rates
  • 36-43%: Good, standard rates
  • 43-50%: May qualify with higher rates (FHA)

How to improve: Pay down credit cards, avoid new loans, increase income through side work. Check your ratio with our DTI calculator.

4. Choose the Right Loan Term

Shorter loan terms have significantly lower rates:

  • 15-year fixed: Typically 0.5-0.75% lower than 30-year
  • 20-year fixed: 0.25-0.5% lower than 30-year
  • 30-year fixed: Higher rate but lower payment

Use our mortgage calculator to compare different term options.

5. Shop Multiple Lenders

Rates can vary by 0.5% or more between lenders. Compare at least 3-5 options:

  • Massachusetts credit unions (often 0.25-0.5% lower)
  • Local banks
  • National banks
  • Online lenders
  • Mortgage brokers

Check our Massachusetts credit union rates to see current offers.

6. Consider Discount Points

Paying points upfront can lower your rate:

  • 1 point: Costs 1% of loan amount, typically lowers rate 0.25%
  • 2 points: Costs 2% of loan amount, lowers rate 0.5%

When it makes sense: If you'll keep the loan long enough to recoup the upfront cost. Use our refinance calculator to calculate break-even points.

7. Time Your Application

Interest rates fluctuate based on economic conditions. While you can't perfectly time the market:

  • Monitor the 10-year Treasury yield (mortgage rates follow this)
  • Lock your rate when you're comfortable with it
  • Consider a rate lock period (30-60 days)
  • Apply when the Federal Reserve is cutting rates

Real-World Example

Let's see the impact of these strategies on a $400,000 mortgage:

  • Before: 680 credit score, 10% down, 7.0% rate = $2,527/month
  • After: 760 credit score, 20% down, 6.0% rate = $1,919/month
  • Monthly savings: $608
  • 30-year savings: $218,880

Take Action

Start improving your rate today:

  1. Check your credit score and report
  2. Calculate your DTI ratio
  3. Determine your target down payment
  4. Compare current rates from multiple lenders
  5. Use our calculators to estimate savings

Ready to see what rate you qualify for? Compare Massachusetts credit union rates now.

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