Even if you’re not looking to become a homeowner right now, you’ve probably heard that the rates right now aren’t great!

This year, the average interest rate on 30-year mortgages has more than doubled, climbing from around 3% to around 6.6%, according to Freddie Mac. It should be no surprise, then, that average monthly payments have jumped at the same rate.

Fortunately, mortgage rates—and payments—aren’t set in stone. In fact, there are several ways to reduce your rate and make buying a home more affordable, even in a challenging market like this one:

Make a larger down payment.

Your loan-to-value (LTV) ratio — or how much you borrow compared to the home’s value — can play a huge role in the rate you get. With a smaller down payment, your LTV is high, and your loan is riskier to a lender. A bigger down payment will lower your LTV and reduce the lender’s risk along with the rate you’ll likely get.

In addition, a larger down payment will result in a lower monthly payment over the life of your loan. For example, if you put 20% down on a home, your monthly mortgage payment will be about half of what it would be if you only put down 5%. Plus, by making at least a 20% down payment, you can sidestep paying the extra fee every month for private mortgage insurance (PMI) that comes with a conventional loan. If you’re unsure how much you’d need to put down to make a difference, talk to your lender.

Consider an adjustable-rate mortgage (ARM), shorter-term mortgage, or government-backed loan.

These kinds of market conditions reward creative buyers. While a 30-year fixed mortgage is the most popular option, it might not the most affordable choice for every buyer in the long run.

For instance, if you’re planning to only be in the home for just a few years (think three to 10 years, max), then an adjustable-rate mortgage can be a smart option. ARMs typically have lower initial interest rates than fixed-rate mortgages, but the interest rate can fluctuate over time. Just make sure you understand the terms of the loan before you sign and you have a plan in place to either move or refinance when/if your rate increases. (Or be prepared for a higher payment!)

Mortgages with shorter terms (usually 10 or 15 years) also typically have lower interest rates than mortgages with longer terms, and will save you on interest since the life of the loan is shorter. However, the monthly payments are much higher because the loan balance is spread over fewer months. This might not do much for affordability, at least if monthly cash flow is your priority.

Government-backed loans, such as FHA loans and VA loans, often have lower interest rates than conventional loans. However, there are some eligibility requirements for these loans. You should always make sure to ask your loan officer about any special programs they have (like for first-time homebuyers, borrowers with low or moderate incomes, and borrowers with good credit) to see if you qualify.

Shop around for the best rate—and NEGOTIATE!

This step is SO important no matter what kind of market we’re in! Most people will get a quote from one or at most two lenders and certainly very few of them will discuss terms. But think about this: When rates rise, the number of people buying and refinancing drops sharply, which means lenders are eager for business and more likely to compete for your loan. Use this knowledge to your advantage!

Aim to get quotes from at least three to four different kinds of lenders, including banks, savings and loan institutions, credit unions, online lenders, and even portfolio lenders. Compare their offers to see who provides the best rates and terms for your individual needs and circumstances.

You could also choose to work with a mortgage broker who works with many lenders and can usually place borrowers into the best program to fit their individual financing needs.

Buy discount points

Buying discount points could be thought of as “purchasing a lower interest rate” and it can make a great deal of difference in times like this. Each point will cost you 1% of your loan amount and can result in up to 0.125 to 0.50 percentage point drop in rate. To determine if purchasing points makes sense for you, divide your buy-down cost by the monthly savings to calculate your breakeven point. For instance, if paying $3,000 for one discount point saves you $100 per month on your mortgage payment, your breakeven point would be approximately 30 months — or two and a half years. You would have to remain in the home for at least that long to recoup your buy-down cost.

Get help from the seller—or builder

In high-rate markets like the one we’re in now, there are still sellers and those sellers still need to move. Whatever their motivation, some sellers will agree to a “concession” which essentially contributes a portion of their sale proceeds to pay the lender for a lower mortgage rate.

These reductions can be permanent or temporary. For example, A 2/1 buy-down would offer a 2% lower rate for the first year, a 1% lower rate for the second year and by year three it would revert to the originally quoted rate and payment. One note about temporary buy-downs: Mortgage lenders will require you to qualify for the loan at the final interest rate—not the reduced one—so make sure you’re able to afford the higher payments.

Alternatively, given that we are still facing a housing shortage, there are still builders holding onto new homes that they’d much prefer to sell. As such, many of them are also offering special incentives like lower interest rates for buyers interested in spec homes (a new home that is designed and constructed speculatively, without a specific buyer in mind)—even some that are move-in ready!

By following these tips, you can still buy a home even if mortgage interest rates are high. Working with a experienced real estate agent can help you navigate the home buying process and find the best mortgage for your needs.

If you’re ready to start looking for a home, you may not need to wait until rates come back down. Contact me today!