Mortgage Rates Move Above 7%: 4 Ways Homebuyers Can Trim Monthly Costs

Mortgage rates have climbed above 7% for the first time since January 2025. Freddie Mac reported that the average rate for a 30-year fixed mortgage reached 7.24%, compared with 6.30% a year earlier.

Still, buyers are not necessarily stuck with a 7% rate. From strengthening your credit profile to shopping multiple lenders, there are several ways to lower borrowing expenses even in a higher-rate market.

Strengthen Your Credit Before You Apply

A stronger credit score can help you qualify for a better mortgage rate. A recent Realtor.com analysis found that reaching the 700 and 720 score ranges can materially cut borrowing costs. Using an average 7% rate as a baseline, a buyer with a score below 660 and a 20% down payment would likely see a 7.30% rate, while a borrower with a 720 score could get 7.03%.

Boosting a credit score is possible, but it takes time.

“This is a long process,” said Jake Krimmel, senior economist at Realtor.com. “Think of it as multi-year [process], not just what you do before you start shopping. Start by knowing your scores across all three credit bureaus.”

He advised reviewing credit reports carefully to see what is helping or hurting the score and to check whether you are near key score thresholds.

To improve your score, focus on paying bills on time, keeping credit card balances low, reducing debt before applying for a loan, and avoiding new credit accounts while house hunting.

Shop Around for Lenders Before Borrowing

It pays not to take the first mortgage offer that comes along. Comparing lenders can create meaningful savings.

“The analysis compared borrowers with the same credit score, down payment, loan size, month and metro,” Krimmel said. “Moving from a typical retail lender to an exceptionally lower one is worth 19.0 basis points — about $5,800 of home purchasing power — which is roughly double the best single credit move and available immediately.”

For many buyers, that makes lender shopping the quickest route to lower costs, without waiting months or years for other financial changes.

Consider a Bigger Down Payment

The Realtor.com analysis found that buyers generally get better rates with at least 10% down, with further savings possible at 20% down.

But much of the benefit of hitting the 20% mark comes from avoiding private mortgage insurance, rather than getting a dramatically lower interest rate.

“Below 20%, one threshold matters and it is 10%. Moving from 5% to 9% down to 10% to 14% is worth 5.5 basis points, the largest single step in the whole sub-20% region,” the analysis said.

Focus on the Full Cost of the Loan

When comparing mortgage options, do not look only at the interest rate. Mortgage insurance, closing costs, discount points and other fees also affect the total cost of borrowing.

“Budget first and work backwards from there,” Krimmel said. “Decide what down payment and monthly payment you can reasonably afford and aim for no more than 30% of income as a rule of thumb.”

He also said buyers should try to negotiate on price when possible.

“Rising rates hurt purchasing power, but buyers in many markets today can make back some or all of that by finding a seller willing to give a little on price,” Krimmel said.