When rates fall, your budget stays the same and the price you can afford rises. On a $100,000 income with $500 of monthly debts and $60,000 down, a 7.5% rate supports about $311,492 and a 5.5% rate about $357,011.
Price by rate
| Rate | Maximum price | Change vs 7.5% |
|---|---|---|
| 7.5% | $311,492 | $0 |
| 7% | $321,847 | $10,355 |
| 6.5% | $332,857 | $21,365 |
| 6% | $344,564 | $33,072 |
| 5.5% | $357,011 | $45,519 |
This works in reverse, too. If you stretch to the maximum at a higher rate, a later refinance can lower your payment, but you cannot count on it. Many buyers pick a price at today's rate and treat any later drop as a bonus.
What we assumed
- Gross income is before tax. Debts are minimum monthly payments (car, student loans, card minimums).
- Property tax 1.2% of price per year, insurance $1,400 per year, PMI 0.7% of the loan when the down payment is under 20%.
- These are rule-of-thumb limits. Lenders also weigh credit score, savings and the property.
Related calculators: Home Affordability Calculator, Mortgage Calculator.
Questions people ask
Should I wait for lower rates?
Nobody can predict rates. Compare the cost of waiting (rent, price changes) with what you would save. The calculator shows the effect of each.
Estimates for general education, not financial, tax or legal advice. Real results depend on your lender, employer, tax situation and location. See the disclaimer.