To save on a home purchase with a mortgage loan, prioritize improving your credit score, shop extensively for competitive rates, and explore loan types like FHA or VA loans. Negotiate closing costs and aim for a 20% down payment to avoid private mortgage insurance (PMI).

A higher credit score directly reduces mortgage rates, as lenders view lower-risk borrowers as safer investments. For example, a 100-point increase in a FICO score can lower rates by 0.5%, saving hundreds annually. The Consumer Financial Protection Bureau (CFPB) reports that 1 in 5 consumers could save $50,000+ over a loan’s life by securing the lowest possible rate. Choosing FHA loans (3.5% down) or VA loans (no down payment) minimizes upfront costs, while conventional loans with 20% down avoid PMI, which typically costs 0.5–1% of the loan amount yearly.

Mortgage shopping is critical, as lenders like Quicken Loans and Bank of America often offer rates 0.25–0.75% below average, per data from the National Association of Realtors (NAR). Negotiating closing costs can save $5,000–$10,000, as real estate agents and title companies frequently reduce fees. The Federal Reserve’s 2022 study found that 60% of borrowers who compared at least three lenders saved more than average. Combining these strategies ensures maximum savings, with the NAR estimating a 20% down payment saves $100,000+ in interest over 30 years compared to 10% down.