Can you Negotiate Mortgage Rates?

As you shop for a mortgage, you are probably receiving rate quotes from different lenders. You may think that the rate they give you is what you get. Did you know, though, that you could negotiate that rate? Lenders have some wiggle room in the rates they offer you. If you have it in you, it’s possible to negotiate until you reach an agreement.

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If you aren’t sure how to negotiate your rate, keeping reading to learn how it’s done.


Your first step should be to shop around. You won’t know the ‘going rate’ until you have quotes from several lenders. Once you have them, take a step back and review them. How do they compare? Are the rates similar or is one lender way off base, either much higher or much lower? This will give you guidelines on where you want to be. If one lender is completely off, you may want to disregard that lender altogether. The other lenders, though, are all fighting for your business. This is where the fun starts.


Once you have your lenders’ quotes sorted out, it’s time to figure out who will give you the best rate. Take the lowest rate you were provided and go to the lender with the next highest interest rate quote and see if they will match the other offer. What you may find is that the lender is willing to not only match the rate, but beat it. This could mean that the lender offers an even lower interest rate or they give you another benefit, such as a closing cost credit. If the first lender won’t bend, or you find that the rate that they offer isn’t low enough for your liking, try the next lender. You can even take the lower offer the first lender you negotiated with offered and try to get an even lower rate from the next lender. Basically what you are doing is getting lenders to compete for your business. They will lower their rates if they still make a profit as long as they can earn your business.


Before you start asking lenders for smaller interest rates, though, you’ll want to do a few things. The idea is to make yourself look as favorable as possible. If you go to a lender with a low credit score and high debt ratio, chances are that they are not going to negotiate with you. Instead, they will likely increase the rate that they would normally provide if they decide to approve your loan. The higher rate will help them make up for the risk you pose.

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The ideal situation is to increase your credit score and decrease your debt ratio. Using the following tips, you can make the most of your situation:

  • Pay your bills on time
  • Pay your credit card balances down or off completely if you can
  • Take care of any outstanding collections that are recent
  • Become an authorized user on a responsible family member’s credit cards
  • Increase your income by taking on a part-time job or starting a side gig to pay your balances down

Ideally, you want a credit score of at least 680 (or higher if possible). You also want a debt ratio that is well below the 43% threshold that most mortgage lenders require. The higher your credit score and the lower your debt ratio, the lower the risk you pose to a lender. Borrowers with high credit scores are less likely to default on their mortgage because they are ‘financially savvy.’ Likewise, borrowers with low debt ratios are better able to keep up with their mortgage payments because they have fewer debts and/or higher income to help them stay on track. FI you want to negotiate your interest rate with a lender, you need to put your best foot forward. Give the lender the best qualifying factors possible so that you can make sure that you are able to negotiate. The less risk you pose to a lender, the more likely they are to negotiate your interest rate.

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