Float-down is a mortgage rate lock with the option to reduce the locked interest rate if market interest rates fall during the lock period. A rate lock with a float-down option can provide the borrower with security against an increase during the rate lock period, while the float-down option allows the borrower to take advantage of a fall in interest rates during the lock period.

With a float-down borrowers have the right to have the rate reduced. They need not walk out on their obligations, relinquish any fees they have paid, and start the loan search all over again. Usually the right can be exercised only once, at which point the float-down converts to a lock.

On a float-down, the lender is committed to the terms agreed upon if interest rates go up before closing, but if rates go down the borrower has the right to lock again at a lower rate. Since this imposes an additional cost on the lender, the price of a float-down is higher than the price of a lock.