Buying a home in 2025 looks different than it did even a year ago. With mortgage rates hovering near 7%, homebuyers are facing new challenges—and doing the math before making a move is more important than ever.
What’s the average mortgage rate today?
According to Zillow, the average 30-year fixed mortgage rate on June 11, 2025, is 6.96%, while 15-year fixed loans sit at 6.10%. Rates have been fluctuating daily, so affordability changes week to week.
Even a small increase or decrease can impact your monthly payment by hundreds of dollars.
A $400,000 home in today’s market
Let’s break down what it would cost to buy a median-priced $400,000 home with a standard 20% down payment and today’s average rate of 6.96%.
| Purchase Price | $400,000 |
|---|---|
| Down Payment (20%) | $80,000 |
| Loan Amount | $320,000 |
| Interest Rate | 6.96% |
| Loan Term | 30 years |
| Estimated Monthly Payment (Principal + Interest) | $2,115 |
Note: This does not include property taxes, homeowners insurance, or private mortgage insurance (PMI), which could easily add $300–$600 per month.
How much house can you afford by income?
A general rule of thumb: your monthly housing costs should not exceed 28% of your gross income. Here’s a rough guide based on annual income and today’s average rate.
| Annual Income | Max Monthly Housing Budget | Estimated Home Price You Can Afford |
|---|---|---|
| $60,000 | $1,400 | ~$250,000 |
| $80,000 | $1,870 | ~$330,000 |
| $100,000 | $2,330 | ~$400,000 |
| $120,000 | $2,800 | ~$475,000 |
Assumes 20% down, no debt, and a 6.96% rate
What else affects affordability?
Beyond the interest rate, several other factors can drastically shift what you can afford:
- Debt-to-income ratio (DTI): Lenders prefer it stays below 36%.
- Credit score: Higher scores can qualify you for lower rates.
- Loan type: FHA, VA, or USDA loans may offer better terms for qualified buyers.
- Local taxes and insurance: These can vary widely by region.
Should you buy now or wait?
While some experts say rates could drop slightly later in 2025, others warn prices may rise again as inventory remains tight. If you’re ready to buy, focus on what you can afford now, not timing the perfect market.
Mortgage rates might drop—but they might not. Your affordability today is what matters most.
Final thoughts
If you’re shopping for a home right now, crunching the numbers at today’s rates is essential. Use online calculators or talk to a mortgage professional to understand your budget. Even a small rate change can shift your affordability by tens of thousands of dollars.
And remember: affordability isn’t just about what the bank says you can borrow—it’s about what you can live with comfortably month after month.