How Interest Rates Affect Your Buying Power

Interest rates aren’t just headlines—they directly affect how much home you can afford. As rates fluctuate, so does your purchasing power. Here’s what you need to know about how rates play into your real estate journey.

What Is “Buying Power”?

Buying power is the maximum home price you can afford based on your income, debts, and interest rate. As rates rise, your buying power decreases—meaning you may qualify for a smaller loan even if your income stays the same.

Example:

Let’s say your budget allows for a $2,000/month mortgage payment:

• At 6% interest, you might afford a $350,000 home.
• At 7%, your budget drops to about $325,000.

That $25,000 difference could mean a smaller home, a less ideal neighborhood, or fewer amenities.

What Can You Do?

• Get Pre-Approved Early: This gives you a clearer view of what you can afford today.
• Explore Creative Loan Options: Lenders may offer adjustable-rate mortgages (ARMs), temporary rate buydowns, or grants.
• Don’t Wait for “Perfect” Rates: Timing the market is nearly impossible. Instead, buy when you’re financially ready and can find a home that fits your needs.

💸 Let’s talk financing. I can connect you with trusted lenders who’ll help you explore your options and secure a loan that works for your budget—so you can buy smart, no matter the rate climate.