What is a good interest rate on a house?
In today's market, a good mortgage interest rate can fall in the high-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circ*mstances. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.
Nearly 9 in 10 U.S. homeowners have a mortgage rate below 6 percent, according to a new report from the real estate company Redfin. Some 88.5 percent have a mortgage rate below 6 percent, down from a high of 92.8 percent of homeowners in in the second quarter of 2022, the report found.
Michael Zuber, author of One Rental at a Time and former tech worker turned real estate investor, told Fortune that a 30-year fixed mortgage at a rate of 3% is without question one of the best assets most homeowners will ever have.
The average 15-year fixed mortgage APR is 6.56%, according to Bankrate's latest survey of the nation's largest mortgage lenders. On Thursday, March 21, 2024, the national average 30-year fixed mortgage APR is 7.01%.
"If you have a 30-year fixed rate ranging from 2.5 percent to 4.0 percent, you should hold on to the property for as long as you can," Herman explains. "If you have a mortgage rate higher than 4 percent, it may make sense to sell your home.
But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5% — that is the “ ...
New survey data from Realtor.com shows that 1 in 5 potential homebuyers are waiting for mortgage rates to dip below 6% to be able to afford to buy a house. If rates drop even lower — below 5% — nearly one-third of potential buyers say they could afford to buy.
30-year, $300,000 loan at 3% interest — In this example, your monthly payment is $1,265. To find the total cost of the loan, multiply that number by 360 (12 x loan term) to get $455,400.
A high-interest loan is one with an annual percentage rate above 36% that can be tough to repay. You may have cheaper options. Annie Millerbernd is a NerdWallet authority on personal loans.
After its December 2023 meeting, the Federal Open Market Committee (FOMC) predicted making three quarter-point cuts by the end of 2024 to lower the federal funds rate to 4.6%. Inflation has started to recede, but the committee has signaled it wants to see more positive data before pulling the trigger.
Who is offering the lowest mortgage rates right now?
- Better, 3.89%
- Bank of America, 4.20%
- Citibank, 4.23%
- Amerisave, 4.33%
- DHI Mortgage Company, 4.34%
- PNC Bank, 4.35%
- Home Point Financial, 4.35%
- Navy Federal Credit Union*, 4.38%
Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the low-6% range through the end of 2024, dipping into high-5% territory by early 2025.
Higher interest rates typically have two effects on the housing market that can help drive down prices: They price some buyers out of the market, which is good for the buyers who remain, and they typically have the effect of putting downward pressure on housing prices, which is good for buyers.
The annual salary needed to afford a $400,000 home is about $127,000. Over the past few years, prospective homeowners have chased a moving target: homeownership. The median sales price of houses sold in the U.S. stood at $417,700 in the fourth quarter of 2023—down from a peak of $479,500 in Q4 2022.
Sure, mortgage rates could fall to 3% at some point, but chances are that's not going to happen anytime soon. Moreover, waiting for rates to drop before you buy your home could backfire. Instead, consider buying your house now and refinancing your mortgage when rates improve.
What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your monthly income should be at least $8200 and your monthly payments on existing debt should not exceed $981.
As mortgage rates inch lower towards the 6% mark, the real estate market is cooling. Still, many homeowners still have low interest rates compared to the 6.66% they fell to last week. In fact, nearly 89% of borrowers have an interest rate below 6%, a Redfin study reports.
Increasing your income, paying down debts, and boosting your credit score can all help lower your risk as a borrower and qualify you for a lower mortgage rate. You can also save up for a larger down payment, as it means the lender has less cash on the line. "Mortgage pricing is all about risk," Sanford says.
The monthly income rule
“You want to make sure that your monthly mortgage is no more than 28% of your gross monthly income,” says Reyes. So if you bring home $5,000 per month (before taxes), your monthly mortgage payment should be no more than $1,400.
The good news is that inflation is cooling, and many experts expect interest rates to move in a downward direction in 2024. Then again, a two-point drop would be significant, and even if rates fall, they're not likely to get down to 5% within the next year.
What is todays interest rate?
Product | Interest rate | APR |
---|---|---|
30-year fixed-rate | 6.825% | 6.903% |
20-year fixed-rate | 6.661% | 6.759% |
15-year fixed-rate | 5.961% | 6.097% |
10-year fixed-rate | 5.847% | 6.030% |
Lender | Loan Amounts | APRs |
---|---|---|
SoFi | $5,000 - $100,000 | 8.99% - 29.99% Fixed APR with all discounts |
Wells Fargo | $3,000 - $100,000 | 7.49% - 23.24% |
USAA | $1,000 - $100,000 | 7.24% - 17.65% |
Discover | $2,500 - $40,000 | 7.49% - 24.99% |
Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.
The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.
So, to estimate the salary you'll need to comfortably afford a $300,000 home purchase, multiply the annual total of $24,000 by three. That leaves us with a recommended income of $72,000. (Keep in mind that this does not include a down payment or closing costs.)
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