Mortgage Rate Lock

A mortgage rate lock is an agreement between a borrower and lender that guarantees a specific interest rate for a defined period while the loan is being processed and underwritten. If rates rise during the lock period, your rate stays at the locked level. If rates fall, you are typically bound to the locked rate (unless you have a float-down option). Lock periods typically range from 30 to 60 days for standard purchases; extended locks of 90–180+ days are available for new construction or complex transactions, usually at a fee. Once your lock expires, you must re-lock at the current market rate. See CFPB — What is a mortgage rate lock?

Choose your lock period based on expected closing timeline: (1) Standard purchase (no issues): 30–45 days — cheapest option, covers typical closing; (2) More complex transactions (short sale, estate sale, relocation): 45–60 days; (3) New construction with delivery within 3–6 months: 90–180 day lock — costs more but protects against rate increases during construction; (4) Custom home builds (12+ months): lenders may offer extended locks up to 24 months with higher fees. Always add a 7–10 day buffer beyond your expected closing date in case of delays. Locks typically cost 0.25–0.50% upfront for extended periods. See mortgage rate lock strategy guide.

A float-down option is an add-on to a rate lock that allows you to reduce your locked rate once (typically) if market rates drop by a specified amount (often 0.25%–0.375%) before closing. Example: you lock at 6.75% with a float-down. If rates drop to 6.375%, you can exercise the float-down and close at the lower rate. Float-down options cost 0.1%–0.5% of the loan amount upfront. They make sense in volatile, falling-rate environments where you want protection against rate increases but want to capture meaningful rate drops. Float-downs are not automatic — you must formally request the exercise and some lenders limit the number of float-downs. See ARM vs. fixed rate 2027 and CFPB — Rate locks.

If your rate lock expires before closing, you face a lock expiration — you must either: (1) re-lock at the current market rate (which may be higher), or (2) pay a lock extension fee. Lock extension fees vary: typically 0.15%–0.375% per week extended for standard locks. If rates have risen since your original lock, extending is usually cheaper than re-locking. If the delay was caused by the lender (not the borrower), some lenders waive the extension fee. Common causes of lock expiration: appraisal delays, title issues, underwriting conditions, buyer or seller delays. Always communicate proactively with your loan officer about timeline risks before the lock expires. See CFPB — Rate lock FAQs.

Canadian mortgage rate locks differ from US locks. Most Canadian lenders offer a rate hold of 90–120 days — guaranteeing the current rate if it rises during that period while still giving you the benefit if rates fall (rate holds move with the market for the better). This is different from a hard lock: a Canadian rate hold guarantees you won't pay more than the held rate, but you get the lower rate if available at closing. Rate holds are standard practice in Canada — borrowers should always request one at the time of mortgage application. Some lenders offer extended rate holds for new construction (6–24 months) at a premium. See mortgage rate lock timing 2027 and FCAC — Choosing a mortgage.