With mortgage rates crossing the 7% threshold for the first time since January 2025, buyers are increasingly feeling the affordability squeeze, but there are concrete steps they can take to retain control over the actual rate they secure—and potentially save tens of thousands of dollars.
According to Realtor.com® economists, headline averages mask widespread rate variation in any given month.
A new report from the Realtor.com team shows how individual borrower choices and financial profiles—specifically involving credit scores, down payments, and mortgage lender selection—determine where they land relative to the 7% headline rate.
The analysis ranks the primary factors dictating borrower rates based not only on their financial impact but also on the time it takes to make them actionable. For example, shopping for the right lender typically requires less time than boosting one’s credit score.
According to Realtor.com senior economist Jake Krimmel, the study of 2025 Freddie Mac loan data shows that mortgage rates varied by nearly a full percentage point around the 7% benchmark within a single month.
While the median borrower lands right at the headline rate, the middle 80% of borrowers snag rates ranging from 6.50% to 7.43%—a 93-basis-point (bps) gap. For perspective, that within-month spread is greater than the movement of headline rates across three months.
For a homebuyer operating on a $2,000 monthly principal-and-interest budget, a difference of 93 bps translates to roughly $28,400 of purchasing power.
How your credit score affects your mortgage rate
When looking at credit score thresholds and their effects on mortgage rates, data shows that when holding all other conditions fixed, crossing the 700 mark translates to a 5.47 bps drop, while climbing the ladder past 720 delivers the largest single-rung rate benefit at 5.51 bps.
The 740 benchmark shaves 4.91 bps off the rate, yet moving past 780 yields the smallest improvement of just 2.56 bps.
When examining the impact on a homebuyer’s budget, boosting one’s credit score from 680 to 720 saves 11 basis points, netting $3,200 in purchasing power. A full overhaul from below 640 to above 780 saves over 32 bps and adds $10,100 to the budget.
Krimmel points out that meaningfully improving the credit score could take time, but Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage, argues that it’s worth the effort.
“Focusing on keeping a good credit score will provide the best benefit for getting a better rate and mortgage terms overall,” DeFlorio tells Realtor.com.
Audi Garner, founder of HELOCpedia specializing in home equity loans, agrees.
“Credit usually moves the needle first,” he tells Realtor.com. “Pricing is tiered, so going from a 700 to a 740 score can improve the rate or cut points more than adding a few percent to the down payment. Once the score is in a top tier, extra cash does the most work when it gets the buyer to a threshold.”
How your down payment affects your mortgage rate
Similarly to credit scores, down payments influence rates through specific tiers and milestones. Crossing the 10% down threshold provides the greatest rate benefit below 20%, shaving 5.5 bps off the borrowing rate.
Contrary to popular belief, Krimmel notes that the 20% benchmark on its own is not a magic number. Going from 15%-19% to 20% down is worth just 0.7 bps, yet the 1 percentage point movement eliminates private mortgage insurance, driving down monthly out-of-pocket costs.
Between 10% and 20% the rate hardly moves, but borrowers should keep in mind that private mortgage insurance is more expensive at lower down payment levels.
Past 20%, meaningful rate reductions scale up to 35% down at 5-point increments before flattening. For example, a down payment in the 21%-24% range is worth 6.7 bps, while at 35%-39%, the mortgage rate shrinks by just 1 basis point.
“A 12% down payment isn’t going to lower rates more than a 10% down payment,” confirms Andy Restrepo with A&D Mortgage LLC. “So if you have 12% to put down, put down 10% and use the other 2% to pay off debt. You will get the same pricing for the down payment and may increase your credit score paying down debt, which could then improve your pricing even more.”
Overall, moving from 20% to 40%-plus down lowers the mortgage rate by 17.5 bps, which translates to roughly $5,400 in purchasing power on a $2,000 monthly budget.
“Making a large down payment is always helpful, as it reduces the amount you are borrowing to bring down monthly payments, but unless you are making a very significant 30% to 40%, you are unlikely to see huge changes on the rate end,” says DeFlorio.
Shopping for mortgage lenders
While the credit score and down payment levers can be highly effective in lowering mortgage rates and delivering savings, their major downside is that they can take years to plan and execute.
Selecting the right lender, however, offers immediate returns, which is crucial once the buyer has set their sights on a home and time is of the essence in a fast-moving, high-rate market. The report highlights three types of lenders: a retail lender, a correspondent lender, and a broker.
A retail lender is typically a financial institution that makes the loan and which the borrower deals with directly.
A correspondent lender tends to be a smaller local financial ffirm that underwrites and funds the loan and then sells it to a larger institution.
A mortgage broker does no funding of their own and instead acts on the borrower’s behalf to find a wholesale lender to underwrite and fund the mortgage.
Based on 2025 data, brokers and correspondent lenders generally priced 5 to 6 bps lower than traditional retail lenders.
Switching from a typical retail lender that originates a mortgage 2.1 bps above the headline rate to a top competitive lender that originates 17 bps below the average can save 19 bps and net $5,800 in purchasing power.
This one change results in double the rate benefit of boosting a credit score from 690 to 720, and without the long wait.
“It is always in your best interest to work with a mortgage broker who has access to many different investors and lenders and is not beholden to a single set of guidelines,” says DeFlorio. “Make sure you find someone you like and trust who is also considering your specific needs rather than just trying to sell the lowest rate.”
However, she advises against chasing low rates blindly.
“If I know a client has a tight closing timeline, then I would not necessarily take them to the lender with the lowest rates,” explains DeFlorio. “Why? Because those banks are totally slammed with applications, and slow turn times could kill the deal and cause a lot of frustration.”
Echoing DeFlorio, Restrepo also emphasises the benefits of choosing a lender or mortgage broker with access to numerous investors.
“Since they have multiple investors they work with, they generally have a wide variety of programs and terms that can help borrowers get the best deal for their situation,” he says.
Restrepo also notes that terms, rates, and available programs are not universal, which is why it is important to shop multiple lenders to find the best option.
Beyond credit scores, down payment amounts, and lender selections, Restrepo argues that finding the right home often outweighs other considerations.
“Rates go up and down, the rate and associated payment might not be exactly what you are looking for today,” he says. “But the house you want may not exist or be at your price point when rates eventually come down. If you can afford it, I’d rather purchase now and know I have the property. It is highly likely you’ll have an opportunity to refinance into a lower rate in the future.”
