How to Get a Mortgage Rate Under 5% as Costs Surge

As mortgage rates surge, securing a lower rate may seem out of reach—especially in the 5 percent range. Fortunately, there are a few options for homebuyers looking to eke out a favorable rate.

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Why It Matters

The average rate for a 30-year mortgage reached a six-month high last week at 6.91 percent, according to Freddie Mac—less-than-stellar news for those looking to purchase a home in the near future.

Just a year ago, the 30-year fixed-rate mortgage had an average rate of 6.62 percent.

What To Know

While a sub-5 percent mortgage rate may not be possible through traditional means, Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage, told Newsweek a rate in the 5s may be achievable through a temporary mortgage rate buydown—particularly a 2-1 buydown.

According to DeFlorio, this “…will reduce the note rate for the first two years of the mortgage and is paid for by a seller or real estate agent credit.”

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Interestingly, an October 2024 survey from Zillow found that 45 percent of homebuyers who purchased a house within the last year reported having a mortgage rate under 5 percent. Further, the survey found the most common method of securing a rate under 5 percent was special-rate home financing offered by the builder or seller, followed by “making their offer contingent on a rate buydown.”

Additional Tips for Getting a Lower Mortgage Rate

Hannah Jones, senior research analyst at Realtor.com, told Newsweek that working to improve your credit score and shopping around for mortgage rates with different lenders can help you secure a lower rate.

“…a recent study found that rate shopping can save borrowers up to 150 basis points, which could get them closer to a low-to-mid 5% rate,” said Jones.

Further, DeFlorio advised potential homebuyers to ensure their credit is excellent and credit card utilization is low (experts suggest lower than 30 percent) to maintain a favorable debt-to-income ratio.

She also suggested focusing more so on the monthly payment than the mortgage rate. After all, your monthly mortgage payment includes not just your rate but the loan principal, insurance and property taxes as well.

What People Are Saying

Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage, told Newsweek: “At this time, [a mortgage rate under 5 percent] is not very realistic unless you are paying points to buy down the rate. Our advice to borrowers is to hold on to that cash and use it instead towards future closing costs when you do a refi as rates drop down the road.”

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Amanda Pendleton, home trends expert at Zillow, said in a press release: “Buyers are finding innovative ways to secure a lower mortgage rate, but sellers are also coming up with financing solutions to make their property more attractive to a potential buyer. Prospective home buyers should explore all the ways they can reduce their monthly payment to bring homeownership within reach.”

Sam Khater, chief economist at Freddie Mac, said in a news release: “Inching up to just shy of seven percent, mortgage rates reached their highest point in nearly six months.”

“Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. However, buyers appear to be more inclined to get off the sidelines as pending home sales rise.”

What Happens Next

Most experts expect mortgage rates to remain elevated in the 6 percent range, with slight decreases over the course of the year.

Freddie Mac anticipates rates will decline “very gradually,” forecasting an average 30-year fixed mortgage rate of 6.2 percent by year’s end.

Meanwhile, Redfin predicts rates “…are likely to remain in the high-6% range throughout 2025, with the weekly average rate fluctuating throughout the year but averaging around 6.8%.”