PR Newswire
Analysis of 2 million loans shows improving your credit score and boosting your down payment can also offset market factors in shaping mortgage costs
AUSTIN, Texas
, Oct. 23, 2025 /PRNewswire/ — Mortgage rates may move with the market, but a new Realtor.com® analysis of nearly 2 million mortgage originations shows that borrowers can play a bigger role in shaping their own costs than many may realize, even in a high-rate environment.
In the third quarter of 2024, for example, when the average mortgage rate was 6.60%, borrowers with stronger lending profiles secured rates as low as 6.25%, while others paid closer to 7.0%. On a $425,000 median-priced home with a 30-year fixed rate, borrowers at the low end of that range will save more than $60,000 over the life of the loan compared with buyers at the high end.
“After years of higher borrowing costs, even small rate improvements can open doors for more buyers,” said Danielle Hale, chief economist at Realtor.com®. “While mortgage rates are expected to ease as the Fed cuts its policy rate, homebuyers who adjust the key factors that influence their individual borrowing costs can make the most of this or any moment.”
Borrower Decisions Drive $300–$3,330 in Annual Savings
Depending on their financial profile, borrowers could pay anywhere from $300 to $3,300 more per year in interest than peers with stronger credit, larger downpayments, or better-shopped loans, a difference that adds up to tens of thousands of dollars over the life of a typical 30-year mortgage.
“Not all improvements have the same payoff,” said Jake Krimmel, senior economist at Realtor.com®. “The data show that hitting key thresholds, like moving from ‘good’ to ‘very good’ credit or putting 20% down, matters more than chasing perfection. Even modest adjustments in the right areas can shift a buyer’s rate enough to save tens of thousands over the life of a loan.”
Comparing Lenders Has the Biggest Impact on Rates, Saving Borrowers up to $44,000
Shopping and negotiating across lenders isn’t just one of the easiest ways for buyers to influence their mortgage rates—it’s also the most powerful. Among all factors studied, lender choice offered the greatest potential rate savings, with rates differing by up to 0.55 percentage points between the most and least expensive options. That gap is larger than the typical difference between “good” and “excellent” credit scores or between small and large down payments.
To put that in perspective, for a buyer putting 20% down on a $425,000 median-priced home, a 6.05% rate versus a 6.6% rate—a 0.55-point spread—equates to $122 in monthly savings, $1,464 per year, and $43,929 over the life of the loan.
Unlike raising a credit score or doubling a down payment, shopping around is an opportunity that’s available to every borrower, regardless of financial position, especially for those planning to purchase during the seasonal Best Time to Buy, when listings, prices, and competition typically align most favorably.
Key Credit and Down Payment Milestones Can Save Borrowers More than $100,000 in Loan Payments
When it comes to credit, the most meaningful improvement came not from exceeding the 760 mark, but from raising scores from “good” (660–720) to “very good” (720–760), which yielded an average 0.11-percentage-point discount. This earns borrowers savings of $24 per month; $288 per year, and $8,735 over the lifetime of the loan.
Down payments, while harder to change, can have a much larger impact. Crossing the 20% down payment threshold produced more than twice the rate benefit of smaller down payment increases. For the same median-priced home, moving from a 10% to 20% down payment not only reduces the loan amount but also improves the rate by an average of 0.09 basis points. Together, those factors add up to about $281 in monthly savings, $3,372 per year, and $101,355 over the life of the loan.
While these savings are significant, doubling a down payment, which means an extra $42,500 at today’s home price, can be a difficult step for buyers. That’s why understanding other levers — such as improving credit or comparing lenders — remains essential for affordability, especially for first-time or cost-sensitive buyers.
Borrowers Pay More for Investment and Nontraditional Properties
Borrowers purchasing second homes or investment properties paid, on average, roughly 0.5 percentage points more than those buying a primary residence. Property structure matters, too: manufactured homes, condos, and co-ops carry higher rates than single-family homes, while planned unit developments (PUDs) tend to have lower rates.
“Even in a challenging homebuying market with sustained high mortgage rates, there’s room for strategy,” Krimmel said. “Focusing on what you can control — improving credit, saving more, and comparing offers — can make a measurable difference in affordability.”
Methodology
We analyzed nearly 2 million mortgage originations between 2023 and 2024 from Freddie Mac’s Single-Family Loan-Level Dataset using statistical methods that allow us to determine what factors best influence—all else being equal—a borrower’s mortgage rate at origination.
Specifically, we employ an Ordinary Least Squares regression model predicting an individual borrower’s actual received mortgage rate as a function of various borrower and property characteristics. The characteristics include the following: borrower FICO score, cumulative loan-to-value, debt-to-income ratio, original loan amount, property type, units in the structure, loan purpose, occupancy status, number of co-borrowers, loan term, loan channel, first-time homebuyer status, the 10-year Treasury yield during the month of origination, the metropolitan area or state of origination, lender name, calendar month of origination, and quarter of origination. The full set of regression model results are available upon request.
About Realtor.com®
Realtor.com® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.
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SOURCE Realtor.com
