Mortgage Rate Lock: When to Lock, Costs & Float-Down Options

A mortgage rate lock is your insurance policy against rising interest rates during the home buying process. When you lock your rate, your lender guarantees that the interest rate quoted on your loan will not change between the offer and closing—provided you close within the specified timeframe and don't make changes to your application. With mortgage rates fluctuating daily (sometimes hourly), a rate lock gives you budget certainty and peace of mind during what can be a stressful 30 to 60-day approval process. Understanding when to lock, how much it costs, and whether a float-down option makes sense for your situation can save you thousands of dollars over the life of your loan.

What Is a Mortgage Rate Lock?

A mortgage rate lock (also called a "lock-in" or "rate commitment") is a formal agreement between you and your lender that freezes your interest rate for a specified period. According to the Consumer Financial Protection Bureau (CFPB), this guarantee protects borrowers from market volatility during the mortgage approval process.

Here's how it works in practice:

• You request the lock: Rate locks are not automatic. You must specifically ask your lender to lock your rate.
• The lender agrees to terms: Both parties agree on the rate, lock period, and any associated fees.
• Your rate is frozen: Regardless of whether market rates rise or fall, your locked rate stays the same.
• You close within the window: The lock remains valid only if you close before the expiration date.

To confirm your rate lock status, check page 1 of your Loan Estimate. It will clearly state whether your rate is locked, the locked rate, and the expiration date.

Understanding how mortgage rates work is essential before making your rate lock decision. Multiple factors influence daily rate movements, including Federal Reserve policy, inflation data, and bond market activity.

Rate Lock Periods and What They Cost

Rate lock periods typically range from 30 to 90 days, though some lenders offer extended locks of 120 days or more for new construction. The longer you need protection, the more you'll generally pay.

Standard Rate Lock Period Costs

According to Credible, many lenders offer 30-day rate locks at no additional cost because the short timeframe presents minimal risk. For longer locks, expect to pay between 0.25% and 0.50% of your loan amount.

Real-world example: On a $400,000 mortgage:

• 30-day lock: Often $0
• 60-day lock at 0.25%: $1,000
• 90-day lock at 0.375%: $1,500

Some lenders build lock costs directly into your interest rate rather than charging a separate fee. This means you might receive a slightly higher rate for a longer lock period without seeing an explicit charge. Always ask your lender to clarify how lock fees are structured.

Lock fees become part of your overall closing costs, so factor them into your total cost comparison when shopping for mortgages.

When to Lock Your Mortgage Rate

Timing your rate lock involves balancing market conditions, your closing timeline, and your personal risk tolerance. There's no universally "perfect" moment, but there are strategic guidelines to follow.

The Rate Lock Window

• Earliest opportunity: When you receive loan approval and select your mortgage product
• Latest opportunity: Approximately 5 days before closing

Most borrowers lock their rate shortly after receiving their Loan Estimate, once they're confident in their lender choice and comfortable with the offered terms.

Factors That Favor Locking Early

Lock your rate when:

1. The current rate fits your budget: If the rate produces a monthly payment you're comfortable with, there's little reason to gamble.
2. Rates are trending upward: During periods of rising rates, locking early protects against further increases.
3. You want certainty: Some borrowers prefer knowing exactly what their payment will be from day one.
4. Your closing timeline is predictable: If you're confident you can close within the lock period, early locking reduces risk.

Factors That Favor Waiting

Consider floating (not locking) when:

1. Rates appear to be declining: If economic indicators suggest rates will drop, you might benefit from waiting.
2. You're comfortable with risk: Some borrowers are willing to accept potential rate increases for the chance at a lower rate.
3. Your timeline is uncertain: If closing delays are likely, locking too early could result in extension fees.

First-time homebuyers often feel pressure to time their lock perfectly. The reality is that locking when you're comfortable with the rate is usually the wisest approach. Don't let the pursuit of a slightly lower rate jeopardize your home purchase.

Float-Down Options: The Best of Both Worlds?

A float-down option allows you to lock your rate while preserving the ability to reduce it if market rates drop before closing. It's essentially a hedge against both rising and falling rates.

How Float-Down Options Work

1. You lock your rate with a float-down provision included
2. Market rates drop during your lock period
3. You request the float-down from your lender
4. Your rate decreases according to the terms of your agreement

Float-down options aren't free—they come with conditions and typically add 0.25% to 0.50% to your rate or closing costs.

Float-Down Limitations

Not every rate decrease triggers a float-down. Most lenders require:

• Minimum rate drop threshold: Rates must fall by a specific amount (often 0.25% to 0.50%)
• Timing restrictions: You may only exercise the float-down during certain windows
• One-time use: Most float-downs can only be used once during the lock period

According to Chase, both the lender and borrower must agree to float-down terms in advance. Review these terms carefully before paying for this option.

Is a Float-Down Option Worth It?

The value depends on your outlook and the cost. Consider this calculation:

Scenario: $350,000 loan amount

• Float-down option cost: 0.375% = $1,312.50
• If rates drop 0.50% and you exercise the option, your monthly savings would be approximately $100
• Break-even point: About 13 months

If you plan to stay in the home long-term and rates are volatile, a float-down can provide valuable peace of mind. If costs are tight or rates seem stable, you might skip it.

What Can Invalidate Your Rate Lock

A rate lock isn't unconditional. Certain changes to your loan application can void your locked rate, potentially leaving you exposed to higher market rates.

Common Rate Lock Breakers

According to the CFPB, your rate can change even with a lock if:

1. Your loan amount changes: Borrowing more or less than originally specified
2. Your down payment changes: This affects your loan-to-value ratio and risk profile
3. You switch loan types: Converting from conventional to FHA or vice versa
4. Your credit score drops: New debt, missed payments, or hard credit inquiries
5. Income verification fails: Overtime or bonus income that can't be properly documented
6. The appraisal surprises you: Property value comes in higher or lower than expected
7. Your lock expires: Closing doesn't occur within the specified timeframe
8. Property issues emerge: Title problems or inspection findings that require renegotiation

Protecting Your Rate Lock

To keep your lock intact:

• Freeze your credit activity: Don't apply for new credit cards, auto loans, or any other financing
• Avoid major purchases: Large purchases on credit can change your debt-to-income ratio
• Maintain your employment: Job changes during the mortgage process create complications
• Respond promptly: Delayed document submissions can push closing past your lock expiration
• Track your expiration date: Know exactly when your lock ends and build in buffer time

Your credit behavior during the loan process matters enormously. If you've already completed mortgage pre-approval, you've seen how sensitive lenders are to credit changes. Maintain that discipline through closing.

Rate Lock Extensions: What They Cost

Sometimes closings get delayed despite everyone's best efforts. Appraisal issues, title problems, seller delays, and documentation snags can all push your closing date past your lock expiration.

Extension Scenarios and Costs

Example: If your 45-day lock expires and rates have risen 0.25%, you might pay 0.25% of the loan amount to extend and keep your original rate.

Avoiding Extension Fees

• Choose a longer initial lock: If your transaction involves any complexity, opt for a 60-day lock instead of 45 days
• Ask about extension policies upfront: Understand costs before you're in a time crunch
• Build buffer time: Assume closings take longer than expected (they often do)
• Stay proactive: Follow up regularly with all parties to keep the transaction moving

Rate Lock vs. Floating: Making Your Decision

Should you lock your rate or let it float until closing? This table summarizes the key trade-offs:

The "Lock and Shop" Option

Some lenders allow you to lock your rate before finding a home. This gives rate security while house hunting but requires longer (costlier) lock periods. The strategy works best in rapidly rising rate environments or when you expect an extended home search.

2026 Rate Environment: Context for Your Decision

Understanding the current rate landscape helps inform your lock strategy. As of February 2026, rates sit at historically moderate levels.

Current Rate Snapshot

• 30-year fixed average: 6.09% (February 2026)
• 15-year fixed average: 5.44%
• 2025 rate range: 6.15% to 7.04%
• Historical average (since 1971): Approximately 7.8%
• Record low: 2.65% (2020-2021)

Source: Freddie Mac Primary Mortgage Market Survey

Expert Forecasts

Major housing authorities expect rates to remain relatively stable through 2026:

The consensus points to rates hovering in the low-6% range, which is below the 50-year historical average. While not as low as the pandemic-era rates, current rates represent reasonable borrowing costs by historical standards.

Implications for Rate Lock Decisions

Given current conditions:

• Rates are below historical averages—locking at today's rates isn't "locking in a bad rate"
• Volatility remains possible due to inflation uncertainty and Federal Reserve policy decisions
• Waiting for dramatically lower rates may be futile—forecasts suggest modest movement, not major drops

The strategic takeaway: Lock when you find a rate that works for your budget rather than trying to perfectly time the market.

Questions to Ask Your Lender

Before committing to a rate lock, the CFPB recommends asking these questions:

1. "What does it mean if I lock my rate today?" — Understand exactly what's being locked and what isn't
2. "What rate lock period does this Loan Estimate provide?" — Confirm the duration
3. "Is a shorter or longer lock available, and at what cost?" — Compare options
4. "What happens if my closing is delayed and the lock expires?" — Know extension policies
5. "Are there conditions under which my locked rate could still change?" — Understand the fine print
6. "What happens if rates go down after I lock?" — Learn about float-down options or renegotiation possibilities

Getting clear answers helps you avoid surprises later in the process.

Reducing Your Rate: Beyond the Lock

If you want to lower your interest rate beyond what the market offers, consider mortgage points. Paying points (prepaid interest) at closing can reduce your rate by 0.125% to 0.25% per point, depending on the lender.

Points make sense when:

• You plan to stay in the home long enough to recoup the upfront cost
• You have extra cash available at closing
• You want to maximize long-term interest savings

Combine a rate lock with points for both protection and savings.

Frequently Asked Questions

Key Takeaways

1. A rate lock protects you from interest rate increases between loan approval and closing
2. Lock periods range from 30 to 120+ days—longer locks cost more but provide greater protection
3. Many lenders offer free 30-day locks; longer locks typically cost 0.25% to 0.50% of the loan amount
4. Lock after loan approval when you're comfortable with the rate—don't try to time the market perfectly
5. Float-down options let you capture lower rates but come with additional costs and conditions
6. Protect your lock by avoiding credit applications, large purchases, and loan application changes
7. Current rates around 6% are below historical averages—a solid time to lock if the payment fits your budget
8. Ask your lender about lock duration, costs, extension policies, and float-down options before committing

The mortgage rate lock is one of the most important protections available to homebuyers. Use it strategically to secure your rate, reduce stress, and move forward with confidence toward homeownership.