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The door to the U.S. housing market is cracking open again.
If you're a potential buyer who's felt shut out by three years of high borrowing costs, it’s worth looking at your math again. For the first time since 2022, the average 30-year fixed mortgage rate dipped below 6% last week.
Of course, we’re still a far cry from the pandemic-era lows of under 3%, but compared to the high 7% range of late 2023, rates that begin with a 5 start to look pretty good. In fact, the 5 can remove an important psychological barrier for prospective buyers, according to some economists. And SoFi data shows the recent dip is already drawing more interest.
“Buyers who’ve been on the sidelines are beginning to re-engage,” said Kara Whitman, a senior mortgage loan originator at SoFi. “They’re feeling more confident about affordability and the upcoming spring/summer buying season."
So what?
If rates under the 6% threshold last (the average ticked up from 5.98% last week to 6.0% this week, according to Freddie Mac), it could wake up the relatively comatose housing market, benefiting both buyers and sellers. But the rates don’t mean as much without the dollars behind them. To help would-be buyers gauge the impact on their monthly payment, here’s some numbers:
On a $400,000 home, 1 percentage point on a 30-year fixed mortgage translates to roughly $200-$250 of the monthly loan payment, depending on the size of the down payment.
| 30-year rate |
10% down (loan of $360,000) |
20% down (loan of $320,000) |
|---|---|---|
| 8% | $2,641 | $2,348 |
| 7% | $2,395 | $2,128 |
| 6% | $2,158 | $1,918 |
| 5% | $1,932 | $1,717 |
Put another way, the monthly payment on a $400,000 home with 20% down today isn’t the $1,350 you would have locked in with a 3% mortgage rate, but it’s also not the $2,300 you would have faced when the average rate peaked at 7.79% in October 2023. And just in the past nine months — since rates began a more steady drop — your payment would have decreased by about $190. (Plug your own numbers into a mortgage calculator like this one.)
Some prospective homeowners may still find the monthly math too much of a stretch for their budgets. But lower payments could technically open the door for millions more people to buy. According to the National Association of Realtors, about 5.5 million households that didn’t qualify for a mortgage about a year ago now do because of the difference in rates.
Lower payments can also help you afford more house with the same income. According to a Zillow analysis, in January, a household with the median U.S. income could afford a $331,483 home, assuming a 20% down payment. In January 2025, they could only manage $301,000.
Of course, mortgage rates are just one part of the buying equation. The price of real estate rose sharply during the pandemic, and many markets still don’t have enough inventory to meet the demand. Renters must also factor in property taxes, insurance, maintenance, and the upfront cost of a down payment before deciding whether to buy. But at least they have the wind at their back.
Related Reading
What a Sub-6% Mortgage Rate Window Means for Spring Homebuying (The Mortgage Reports)
Housing Affordability Improves Nearly 10% In 2025 as Rates and Incomes Align (National Mortgage Professional)
A Trick for Lowering the Cost of a Small Down Payment (SoFi)
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