Rate Locks and Float-Downs: Protecting Your Rate Before Closing

Once you’re under contract, the rate you were quoted isn’t yours until you lock it. A rate lock is a lender’s commitment to honor a specific rate for a set period — commonly 30, 45, or 60 days — provided the loan closes inside that window.

How locks work:

• Longer lock periods cost more, priced into the rate or charged upfront, because the lender carries the risk for longer
• A lock attaches to a specific loan file — changing the loan amount, property, or program can require re-locking at current pricing
• If closing slips past expiration, an extension is usually available for a fee
• Letting a lock expire means re-pricing at market, which may land better or worse than where you started

Where a float-down fits:

• A float-down lets you capture a lower rate if the market improves after you lock — typically once, and within defined limits
• It generally requires a minimum rate improvement, often 0.25% or more, before it can be exercised
• Lenders charge for the option, either upfront or built into the rate
• It’s most valuable on long locks and new construction, where the closing date sits far out and markets have time to move

The right lock length is the one that matches your realistic closing date, not your optimistic one — extension fees frequently cost more than simply choosing the slightly higher rate on a longer lock would have. Walk through your timeline with your loan officer before locking, not after.