How to Shop for a Mortgage in 6 Steps
You’ve probably heard the advice to “shop around” for a mortgage — but what does that really mean? Below, we’ll explain how to shop for a mortgage effectively by comparing lenders, understanding rates and choosing the best home loan for you.
1. Check your credit scores
Credit scores are important when you shop for a mortgage for two reasons:
First, they help you understand which loan programs are available to you right now.
| Loan type | Minimum credit score |
|---|---|
| Conventional | 620 |
| FHA | 500 (with 10% down) or 580 (with 3.5% down) |
| VA | No set minimum, but many lenders require 620 |
| USDA | No set minimum, but many lenders require 640 |
Second, credit scores have more impact on the interest rate you’re offered than any other loan factor. And lenders don’t just look at one credit score — most review scores from the three major credit bureaus (Equifax, Experian and TransUnion) and use the middle score of those three for your loan approval and interest rate quote.
3 tips to raise your credit score
If your credit score is low, it can really pay dividends to spend some time boosting it before you start mortgage shopping. Here are some ways to do it:
- Pay off debt 60 to 90 days before you apply. Your credit report won’t immediately reflect the most recent debts you’ve paid off, so give it some time — especially if you recently maxed out your credit cards. In general, keep your credit use at 30% or less of your total credit limit.
- Add or remove yourself as an authorized user. If you’re a user on a card with a high balance, getting taken off may help your scores. But if you hardly have any credit history, being added as an authorized user may give your scores a nudge upward.
- Don’t apply for any new credit. Each time you apply for credit, the credit-reporting algorithm assumes you may be taking on more credit. Although one or two inquiries doesn’t typically hurt much over a 60- to 90-day period, more inquiries could push your scores down.
2. Assess your budget
How much mortgage debt you can afford to take on is a decision you need to actively make — don’t simply take out the maximum you can qualify for. You need to set a range that you can live with comfortably, and it needs to be a number that will remain comfortable even after you’ve made a down payment.
A great way to dial in what you can afford is to look at your debt-to-income (DTI) ratio. Our home affordability calculator can help you do this, or you can calculate it by dividing your total monthly debts — including the new mortgage you’re considering — by your gross monthly income.
A DTI ratio between 15% and 28% is fairly conservative and should be easy to afford, while a DTI above 35% could stretch your budget thin. Most lenders won’t allow you to go above a 41% to 50% DTI ratio, depending on the program.
| Loan type | Maximum DTI ratio | Minimum down payment | Loan limits |
|---|---|---|---|
| Conventional | 45% | 3% | $806,500 in most areas* |
| FHA | 43% | 3.5% (with 580 credit score) or 10% (with 500 credit score) | $524,225 in most areas** |
| VA | 41% | 0% | None |
| USDA | 41% | 0% | None |
*Based on 2025 conforming loan limits for a single-family home.
**Based on 2025 FHA loan limits for a single-family home.
3. Decide which loan terms are best for you
Before you start reaching out to lenders, decide whether you’re interested in fixed-rate or adjustable-rate mortgages (ARMs), and whether a short or long repayment period appeals to you. The most common fixed-rate loan terms are 15 and 30 years.
How to choose the right loan terms for you
| Loan type | Best if: |
|---|---|
| Fixed-rate mortgage | You want a predictable monthly payment that won’t change over time |
| Adjustable-rate mortgage | You need a lower payment for a short period, and plan to sell or refinance the loan before the adjustable-rate period starts |
| Long-term fixed rate | You want the lowest payment possible or are applying for a large loan amount |
| Short-term fixed rate | You want to pay off your loan faster and can afford the higher monthly payment |
For more detail on how these options differ, check out our guides to 15- versus 30-year loans and how adjustable-rate mortgages work.
4. Research and contact lenders
Once you have a good idea of which programs make sense for you — based on your credit scores and budget — it’s time to start comparing loan estimates from different lenders. You’ll typically get the best deals by checking with three to five lenders, according to LendingTree data.
There are several ways you can compare rate offers:
- Try an online comparison site. The biggest benefit of this approach is that you can enter all of your information once. This saves you effort but, more importantly, it ensures that your quotes are comparable, since they’re made on the same day and for the same loan type.
- Contact three to five different lenders. If you prefer to speak to someone, you can call or visit several lenders to get their quotes. Again, since interest rates change daily, be sure you only review quotes side-by-side that you initiated on the same day.
Unsure which lenders to start with? Read our list of the best mortgage lenders of 2025 below, or check out our mortgage lender reviews by searching a lender’s name and “LendingTree” online.
Lender | Best for | User ratings | Rate spread
Rate spread is the difference between the average prime offer rate (APOR) — the lowest APR a bank is likely to offer any private customer — and the average annual percentage rate (APR) the lender offered to mortgage customers in 2023. The higher the number, the more expensive the loan.
| Min. credit score | Avg. total loan costs
Average total loan costs include orginiation fees and are based on 2023 data from the Federal Financial Institutions Examination Council (FFIEC).
| |
|---|---|---|---|---|---|---|
Best mortgage lender for VA loans |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 0.73% | 580 to 680 | $8,122 | Get Offers | |
Best lender for online mortgage experience |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 0.41% | 500 to 620 | $7,959 | Get Offers | |
Best mortgage lender for FHA loans |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 0.40% | 600 | $11,690 | Get Offers | |
Best mortgage lender for refinance loans |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 0.02% | 620 | $7,794 | Get Offers | |
Best mortgage lender for jumbo loans |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | -0.04% | 700 | $7,068 | Get Offers | |
Best lender for home equity loans | User reviews coming soon | 1.01% | 580 to 620 | $5,092 | Get Offers | |
Best lender for overall mortgage loan variety |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 0.49% | 580 to 620 | $8,170 | Get Offers |
5. Compare mortgage rates
Once you have your loan estimates in hand, the first thing you’ll likely want to know is which lender is offering you the best mortgage rate. However, it’s not always as simple as looking at a single number. Here’s what you need to know:
The difference between APRs and interest rates
Your annual percentage rate (APR) is disclosed on Page 3 of your loan estimate, and reflects the total cost of getting a mortgage. It’s different from the interest rate, which only tells you the costs of borrowing the money. Generally speaking, the bigger the difference between your APR and interest rate, the more you’re paying in closing costs. However, it’s still a good idea to compare the itemized costs on the loan estimate to make sure you’re getting the best deal.
No-cost, full-cost and buydown rates: Which should you choose?
If there’s a big difference in the rates you’re quoted, it could be due to how your closing costs are being charged. Lenders will typically offer you a no-closing-cost, full-cost or a buydown option. Here’s how each works:
- No-cost mortgage. This should really be called a “no-out-of-pocket-cost mortgage” — you’ll still pay closing costs, but your lender covers them by increasing either your interest rate or loan amount, which means you’ll have a higher monthly payment.
- Full-cost mortgage. You’ll see origination charges and all costs charged to you on this type of cost structure. The interest rates are typically lower if you’re paying the closing costs out of pocket.
- Discount point (“buydown”) option. This option involves paying mortgage points to get a lower rate. One discount point equals 1% of your loan amount, which adds to your total out-of-pocket cost. For example, one discount point on a $300,000 loan would cost you $3,000.
To determine which type makes the most sense for you, consider the following:
| Choose a no-cost mortgage if: |
|
| Choose a full-cost mortgage if: |
|
| Choose a buydown mortgage if: |
|
How to use a break-even calculation to decide
Calculating the break-even point on your cost options is the best way to decide whether paying your closing costs in full or buying points makes sense. You simply divide the total costs by the monthly savings to determine how many months it’ll take to recoup your costs.
For example, if you spend $5,000 to get a rate that saves you $100 per month, your break-even point is 50 months — just over four years — which is how long it would take to recover the $5,000 you spent to get a lower interest rate.
6. Compare closing costs
When you’re comparing loan estimates, pay special attention to the total closing costs. They typically range between 2% and 6% of your loan amount, but will vary depending on the loan program you apply for and how much your lender charges in origination fees.
Here’s what to keep in mind:
Mortgage insurance
If you make a down payment that’s lower than 20%, lenders usually require you to pay for mortgage insurance to protect them against losses. Some loan programs charge a guarantee fee instead of mortgage insurance. Below is a breakdown of how much you can expect to pay.
| Loan type | Mortgage insurance type | How much it costs |
|---|---|---|
| Conventional | Private mortgage insurance (PMI) |
|
| FHA | FHA mortgage insurance |
|
| VA | VA funding fees |
|
| USDA | USDA guarantee fees |
|
How to negotiate closing costs
You’ll see three categories of costs on Page 2 of the loan estimates you receive: loan costs, services you can’t shop for and services you can shop for. You’ll want to focus on loan costs and services you can shop for when you’re ready to start haggling for the best deal:
- Loan costs. These include origination charges, application fees and underwriting fees, and they’re always negotiable, along with the interest rate. Pay close attention to this section if you get a really low-interest-rate offer — it may come with expensive mortgage points that’ll come out of your pocket to cover the lower advertised rate.
- Services you can shop for. Borrowers are often surprised to learn they can shop for title insurance and services required on purchase and refinance loans. That’s usually because on a purchase loan, the seller chooses the title company, or it’s negotiated in the purchase contract. However, on a refinance, you can compare title fees to save on your total costs.
Frequently asked questions
If you’re planning to buy a home within the next 90 days, you should start shopping now. You’ll want to research available loan programs, review your credit reports and scores, and choose the right mortgage type long before you start making offers. This ensures that there are no surprises once your offer is accepted.
If you’re applying for a mortgage refinance, you should start shopping once you’ve determined whether the cost outweighs the benefit of refinancing. A refinance calculator can help you decide.
There are many factors that help determine mortgage rates. The ones you can control include your credit score, down payment, loan type and loan program. The ones you can’t control include the overall economic environment, regulatory changes and lenders’ pricing strategies. The bottom line: Shopping around will help you find your best rate.
The difference between being prequalified versus preapproved is how much information you have to submit and how exact the loan offer is. When you get prequalified, you submit some details about your finances and a lender gives you an estimate of how much they’re willing to lend you. When you get preapproved, you submit information and documentation that allows a lender to write you a preapproval letter.
Boosting your credit score, making a bigger down payment and shopping with at least three to five different lenders are great ways to get the best rate.