If you’ve been a loyal reader (and if not, why not?!?), you have read that once people find out that I’m a mortgage professional, the first question is always about the current rate.
My go-to response is that the published rate is simply a national average, and that rates are based on an individual’s financial strength.
Then I explain that the most important goal for a buyer is to find a payment that is comfortable (yes, everyone has a different comfort level) for them, and to then work backwards to determine their maximum loan amount.
As I write this article (9/14/26), the national average rate on a 30-year, fixed, conventional mortgage is 7.17%. The last time it was below 6% was on 9/8/22 when it was 5.89%.
Remember, this is not necessarily the rate that you would see with your unique personal financial situation. It's the national average and it's used to help mortgage pros like me get an understanding of the market direction.
The funny thing is that I’ve recently quoted rates in the high 5% for buyers with credit scores that weren’t all that great. So, watching the rates like a hawk isn’t going to move you ahead on your journey to home ownership and possibly, real estate riches.
Because rates are very much an individual thing, it behooves you to chat with your local mortgage hero and find out what reality looks like for you. You might be happily shocked!
Yay! Let’s do Some Math! Relax. I’ve got this. Maybe I’ll let you do some in the future. For now, let’s compare the same loan (30-year fixed, conventional) with the same down payment.
For this activity, we’re not looking at insurance, HOA, or any other costs. We’ll be looking at just the loan payment itself.
As you know, I focus my mortgage practice in New York and New Jersey. For the readers in other parts of the country where you can buy 10 acres and a mini-mansion for $400,000, the figures I choose here are reality in this part of the US.
For the 2 scenarios, let’s use the following facts to compare the rates I mentioned above of 5.89% and 7.17%. Both programs are 30-year fixed, conventional loans:
Scenario #1:
House price: $850,000
Down Payment: $170,000 (20%)
Loan Amount: $680,000
Rate: 5.89%
Monthly Payment: $4,029
Scenario #2:
House price: $850,000
Down Payment: $170,000 (20%)
Loan Amount: $680,000
Rate: 7.17%
Monthly Payment: $4,602
The difference between these rates is 1.28%, and the monthly payment difference is only about $570 per month.
I used the same parameters and ran the same math on a $400,000 loan amount and the difference is only $270 per month.
How about the difference on a loan amount of $250,000? It’s only $210 per month.
This is fun! Let’s do a $1,000,000 loan amount. Just $843 difference between the 5.89% and 7.17% rates.
My point here is that even at a 1.28% higher rate, there isn’t a huge difference in the monthly payment.
I hate to say it, but it’s mainly psychological.
Stop focusing on the stinkin’ rate! Please…
OK, Mr Wizard, what should a buyer do? Here are 5 things that can help you more easily deal with a high-rate environment.
1. Figure out a comfortable payment before you start looking for a house There’s more than just a simple monthly payment when it comes to affording a home. It also hammers home why mortgage pros (and most real estate pros) practically beg buyers to meet with us before you bother a real estate pro:
Principal and interest (the “mortgage payment”)
Property taxes (our favorite topic here in NY and NJ)
Homeowner’s insurance
Mortgage insurance (if you put down less than 20%, you’re paying this)
HOA or condominium charges (if applicable)
Utilities
Maintenance
Commuting costs
A reasonable emergency cash reserve
The bigger question is not how large a loan you can get, but if it fits into the total of all the other payments you’ll make each month.
Once you have looked at the whole picture and have arrived at a payment that isn’t going to force you to join a cartel, I can work backward to calculate a realistic home price range.
2. Get preapproved using current rates Generally, we create Preapprovals with a life span of 90 days. So, depending on your financial situation, you may not qualify for the same maximum loan amount if rates explode during that 90-day life span.
It doesn’t mean the rate explosion disqualifies you from buying a home, but it might not allow you to buy as much house as before.
If your Preapproval is approaching its 90-day expiration date, ask someone like me (me, please!) to update your:
Maximum purchasing power
Estimated payment
Cash required to close
Debt-to-income ratio
Available loan programs
The effect of different down payments
If nothing really changed in the rate or your financial situation, all good. But it’s best to know the truth so you aren’t surprised when you make an offer and financing falls through.
3. Compare Loan Estimates to get a better picture A lender can often produce a lower interest rate by charging more discount points. That does not automatically make it the better loan.
When you see lenders offering their current rates online, you should look for the fine print regarding points. If you pay $5,000 to buy enough points to save $100 per month in your mortgage payment, that means to break even, you’ll need to spend 50 months in the home.
If you plan to live in the house beyond 50 months, then that should be OK. If you know you’ll be transferring in 36 months, maybe not.
When comparing Loan Estimates, consider:
Interest rate
Annual percentage rate (very important to compare to cut through the clutter)
Discount points
Origination charges
Lender credits
Monthly mortgage insurance
Cash to close
Monthly payment
Rate-lock terms
Federal law gives buyers the right to compare Loan Estimates from different lenders, so I recommend doing so.
4. Investigate every loan program that makes sense for you Everyone wants the conventional 30-year fixed rate loan. People like them because the monthly payment stays the same through the entire 30 years. But there are many other programs that might be a better fit for you:
FHA financing
VA financing (As a retired Marine, I used this for my first home)
USDA financing
SONYMA programs (NY state specific, but check your own state’s programs)
NJHMFA programs (NJ state specific)
Down-payment assistance
HomeReady or Home Possible
Renovation financing (203K family of programs. Check out my Substack article about these amazing programs)
An adjustable-rate mortgage (AKA the ARM loan)
A condominium-specific or first-time-buyer program
Just because a program has a lower rate doesn’t mean it’s always the cheapest. For example, an FHA loan may have a lower rate and down payment requirement, but they also come with upfront and monthly mortgage insurance payments.
Base your comparison on how much you’ll pay each month and how long you plan to live in the property.
5. Improve your borrower profile before blaming the market As individual human beings, we can’t control the Treasury rate movements, the news, or what institutional investors will do.
But we can control our own financial situations to make ourselves more powerful borrowers.
Here are some things you can do to give you more control:
Paying down credit cards and other revolving credit
Correcting credit-report errors
Avoiding new credit accounts
Preserving cash reserves
Documenting all qualifying income
Increasing the down payment if possible
Reducing the loan amount (by making a larger down payment)
Using gift funds
Considering a less expensive property or lower-tax location
A small improvement in your credit score can sometimes move you into a better pricing tier.
Moving forward… Remember, if you’re only considering rate, you might be missing out on opportunities. You need to decide if you should:
Buy this particular home now
Continue to rent
Wait and buy in a potentially different market
You can’t control the rates, but with the help of your mortgage pro, you can control your own buying power!
PS: If you’re planning to buy in New York or New Jersey and need some mortgage advice, feel free to contact me:
Timothy “Tim” Fox (NMLS 2017742)
(914) 656-0039
mortgagebytimfox@gmail.com
FBC Mortgage, Inc (NMLS 17252)