Get ready to buy in 2026

It appears homebuyers might be ready to take advantage of lower mortgage rates in 2026. Mortgage rates have consistently dropped since the end of spring in 2025, making homeownership more affordable, particularly to first-time homebuyers.  

Experts predict an increase in new home sales, meaning that homebuyers might take advantage of the lower mortgage rates. 

To prepare for 2026 housing market, start your loan application and connect with a loan officer today! 

While 2025 was more of seller’s market, 2026 looks to pivot toward a buyer’s market. 

A buyer’s market is when there are more homes available than potential buyers, giving buyers an advantage when looking for and negotiating prices on homes. A seller’s market is the reverse, and home sellers can be a little more selective when looking for a potential buyer. 

Looking toward 2026, The National Association of Realtors® anticipates an increase in existing and new home sales, while predicting a slight decrease in mortgage rates. Their predictions are based on a number of factors, including the recent increase in mortgage applications, which tells them that a greater number of people have a desire to enter the housing market soon. 

Whether you’re a first-time buyer or looking to upgrade in 2026, preparation will be key.  

Here’s how to get everything in order before year’s end to make your homebuying journey as smooth as possible. 

Usually, our first piece of advice would be to start your home search by getting pre-approved. But since we’re talking about buying a home next year, you have a little more time and can start getting your financial situation in order before a pre-approval.  

When you begin your home search, start by evaluating your financial situation — income, savings, debt and spending habits. How comfortable are you with the idea of putting a down payment on a home and paying a monthly mortgage? Keep in mind that if you’re renting, you can replace your rent with your mortgage payment. 

Use our affordability calculator to get a better understanding of how homeownership could fit into your budget. 

Your credit score* is one of the most significant factors lenders consider when offering mortgage rates. You can reach out to any of the three credit report bureaus to find our your score for free – Equifax, Experian or TransUnion. Your score is given in a range from 300 to 850. Most lenders prefer to see credit scores above 720 and may offer you a higher rate if your score is below that.  

Start by checking your credit report, addressing any errors and working on paying down existing debts. Since credit takes time to build, starting early will put you in a strong position to begin the new year. 

In addition to paying down any existing credit card debt, you should also try to get into healthier habits with your credit cards. Paying off all new charges in full each month is a good habit to get into. Try to keep your credit utilization lower than 30% of your total credit available as high balances, even if paid monthly, can temporarily lower your score.  

Whatever you do, don’t open new lines of credit, like store cards, before applying for a mortgage. New credit accounts can lower the average of your credit and suggest financial strain. 

The more you can pay as a down payment on your home, the lower your monthly mortgage payment will be. So aim to save up for a larger down payment between now and the time you make your offer.  

Start by spending less and saving more. Consider placing funds in a high-yield savings account to maximize returns before buying. Don’t forget closing costs, typically 2% to 4% of the home’s price. Paying them up front is cheaper than rolling them into your loan, and some programs may help cover them.  

While 20% down payment is considered standard, it is by no means necessary or even that common. If you need help, look into assistance programs or other funding options. 

Having all your financial documents ready is essential for a smooth mortgage process. Lenders will likely ask you to provide the following documents during the application process: 

• Proof of income 

• Evidence of assets 

• Contact information for your real estate agent, lawyer, inspector and others 

• Tax documents, including W2s and tax returns, for multiple years 

• Information about past employers 

Having these documents ready could cut down on delays and make it easier to submit your application so you can move quickly. 

One way you can keep your documents ready to share is with the Rate App. The app puts our Digital Mortgage at your fingertips at all times so you can provide the necessary information that your Loan Officer needs as soon as it’s requested. You can download the Rate App for free. 

Understanding what you can afford is crucial to avoiding future financial strain. Take a close look at how much of your income goes to essentials like housing and debt. Ideally, your debt-to-income (DTI) ratio should stay under 36%, with housing costs alone consuming no more than 28% of your income. Our affordability calculator will help you create a homebuying budget. 

Mortgage rates change constantly. Since the end of May, mortgage rates have declined steadily, reaching one of their lowest points of the past three years. Experts at The Mortgage Bankers Association predict rates for 2026 to stay at 6.4% throughout the year. If rates continue to drop, you’ll want to act quickly to secure the best deal. That’s why it’s so important to have a relationship with a lender. They’ll be able to tell you when it’s time to lock in a rate. 

Being pre-approved for a mortgage could show sellers you’re a serious buyer. Pre-approval gives you a clear picture of what you can afford and can expedite the process when rates drop, ensuring that you’re ready to move fast.  

Not all pre-approvals are the same, however. PowerBid Approval from Rate is a fully underwritten credit approval that can compete with cash offers. You can lock in your rate for 90 days, and it’s renewable. It’s fast, too, with priority turn times to help you become a power buyer overnight. Start your search with PowerBid Approval.  

All indications are that the market will be competitive, especially if mortgage rates decline further next year. If experts’ predictions are correct, there will be more people looking to buy next year, and there’s a possibility that the number of homes for sale will increase. By following these steps, you’ll be able to stay ahead of market conditions and in a prime position to secure your dream home in 2026. 

 Start your mortgage application today and connect with a loan officer to find out how you can get ready to enter the housing market in 2026. 

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