How Rising Interest Rates Affect Your Buying Timeline

Interest rates play a huge role in determining how much home you can afford. Even a small increase can change your monthly payment — and, in some cases, your entire buying timeline. If you’re planning to purchase a home, here’s what you need to know about how rising rates could impact your plans.

Higher Rates Reduce Buying Power

When interest rates rise, so does the cost of borrowing. This means a higher monthly payment for the same loan amount, which could reduce the total price of the home you can afford.

Example:

• $300,000 loan at 5% interest → ~$1,610/month (principal & interest).

• $300,000 loan at 7% interest → ~$1,996/month.

That $386/month difference could push some homes out of reach.

It May Change Your Buying Timeline

• Buy Sooner: Some buyers decide to move quickly before rates climb higher, locking in a lower monthly payment.

• Wait and Save: Others choose to wait, build a larger down payment, or improve credit to offset higher interest costs.

• Adjust Expectations: Rising rates may mean considering smaller homes, different neighborhoods, or alternate loan programs.

Explore Loan Options

Even with higher rates, there are strategies to help:

• Adjustable-Rate Mortgages (ARMs): Lower initial rates for buyers who don’t plan to stay long-term.

• Rate Buydowns: Pay upfront points to reduce your rate for the first few years (or the life of the loan).

• First-Time Buyer Programs: Grants or assistance programs may help reduce overall costs.

Long-Term Perspective

While higher rates may slow your buying timeline, they shouldn’t stop it entirely. Historically, interest rates fluctuate — and even if you buy at a higher rate now, you may have the option to refinance later if rates drop.

Final Thoughts

Rising interest rates can affect what you buy, when you buy, and how much you spend. But with the right planning and guidance, you can still achieve your homeownership goals — it just may take some adjustments.