How a Rate Lock (and Float-Down) Works

What it is

A rate lock is a lender’s commitment to hold a specific interest rate for you for a set window, protecting you from rate increases while your loan is processed. Since rates can move daily, a lock removes that uncertainty between application and closing.

How it works

• Lock period. Locks commonly run for a set number of days — often 30, 45, or 60 — chosen to cover the time you need to close. Longer locks may cost slightly more.
• What it protects. If market rates rise during the lock window, you keep your locked rate. If rates fall, a standard lock means you generally don’t automatically get the lower rate.
• When you can lock. You typically lock once you have a property under contract and an application in progress, though some lenders allow earlier locks.
• Extensions. If your closing is delayed past the lock’s expiration, you may need a lock extension, which can carry a fee. If the lock expires without an extension, you may be re-priced at current market rates.

The float-down option

Some lenders offer a float-down — a feature that lets you capture a lower rate if the market drops meaningfully after you lock, while still being protected if rates rise.

• It’s usually optional and may cost extra, either as an up-front fee or a slightly higher starting rate.
• Terms vary: there’s often a minimum rate-drop threshold and a limited window in which you can exercise it.
• Not all lenders offer it, and the specifics differ, so read how the option works before relying on it.

How to think about timing

• Match the lock length to your realistic closing timeline to avoid paying for an extension.
• A lock caps your downside on rising rates but limits your upside on falling rates unless you have a float-down.
• Confirm the fees, the expiration date, and the extension terms in writing with your lender.