How to Get a Mortgage Rate Below 4 Percent

While many Americans may believe there's no way for them to feasibly get a mortgage rate below 4 percent with today's interest rates, there's still hope.

While the housing market odds are still generally stacked against buyers, you could save more money with a sub 4 percent mortgage rate if you know where to negotiate and how to invest in your home, experts say.

Read more: Learn More About Assumable Mortgages and How to Transfer a Home Loan

The way to ensure you get a mortgage rate under 4 percent is to look out for "assumable mortgages." These are the mortgages insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA) or United States Department of Agriculture (USDA).

Currently, 23 percent of active mortgages are assumable, meaning there are roughly 12 million across America, according to Intercontinental Exchange. Within that group, 14 percent, or 7.2 million, have interest rates under 4 percent.

"The number of assumable mortgages out there today are relatively small, but certainly growing and will continue to as some sellers feel the pressure to move houses in a more expensive market," Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

Read more: How to Qualify for an Affordable Mortgage

He added: "The idea behind an assumable mortgage is that the buyer essentially takes on the original interest rate the current owner received, which can be substantially lower than the current average banks and other loan agencies are offering. The downside is the buyer has to usually pay a higher upfront cost to inherit the loan at that rate."

And as home buyers know, the lower the interest rate, the more money you can save on a home. This is usually in the thousands-range monthly, since loan rates are generally set between 6 and 7 percent.

But, with that much in financial savings, many Americans worry assumable mortgages have a catch. For one, they're rare to get, and few listings will advertise them.

There are some ways to increase your odds, as assumable listings sites like Roam have started to exist. Granted, Roam specifically is limited to homeowners in Arizona, Georgia, Colorado, Florida, Illinois and Texas.

Read more: Find the Lowest Rates From Top Mortgage Lenders

Generally, though, assumable mortgages require higher down payments. A home that costs $450,000 might need a $100,000 payment, which is out of reach for many everyday Americans navigating inflation and general economic uncertainty.

"It's a great deal in our current interest rate environment, but bear in mind you have to have substantial cash on hand to qualify for that lower rate," Beene told Newsweek. "Even if you did qualify, you still want to make sure the long-term math adds up for you. After all, the real issue in the housing market right now is affordability in general. Even at a lower interest rate, buyers could have a hard time being able to afford a property long term."

Veterans seeking assumable mortgages also face difficulties, as their entitlement—what the VA promises to repay—to buy a home is not fully guaranteed until they pay the loan completely. In practice, veterans can lose their entitlement whenever a foreclosure or short sale strikes, and they'd have nowhere to turn to.

The best way to get an assumable mortgage rate, though, is to negotiate, negotiate, negotiate.

Buyers have a right to negotiate on many fees, including, but not limited to: application fees, origination fees, rate lock fees and even real estate agent commissions.

You can also find a real estate agent that fits your financial needs on ListWise where an agent will confirm a minimum price they believe they can get for your property and their payment is dependent on how successful they are.

There are also some tax shortcuts to getting more money on your property. If you sell your primary residence, for instance, you can exclude up to $250,000 of the profit—or $500,000 as a couple—from the federal income tax.

This is true as long as you've lived in the home for at least two of the last five years and haven't sold another home in the last two years.

You can also deduct mortgage interest if you itemize on your yearly taxes for the first $750,000 of mortgage debt paid.

Keep in mind, any additions you make to your home could up the property in value, including landscaping, painting or energy upgrades, which can also provide you tax credits.

Kevin Thompson, a finance expert and the founder/CEO of 9i Capital Group, still said the best way to obtain a lower mortgage rate are some of the traditional tried and true methods.

"The best ways of going about obtaining a lower mortgage include some of the more traditional steps," Thompson told Newsweek. "Credit score is very important, lenders often work with those that are most credit worthy and likely to give huge discounts the higher your credit score."