Buying a Home When Interest Rates are High

August 1, 2026

If you’ve been waiting for mortgage rates to fall before buying a home, you’re not alone. Experts say the decision isn’t as simple as waiting for lower rates. The better question is whether buying makes sense for your finances today.

According to a recent Rocket Mortgage survey, nearly 60% of Americans said that they would not start looking for a house now. The top three reasons for staying out of the market are high home prices, insufficient savings, and high mortgage rates. In the last five years:

• Home prices increased from $368,000 to $411,000;
• Mortgage rates increased from under 3% to over 6%; and
• Household debt increased from $96,000 to $105,000, while average wages adjusted for inflation remained flat.

Evaluate Your Situation

Mortgage rates generally move with the yield on 10-year U.S. Treasury notes, which are influenced by investor expectations and Federal Reserve policy. As of June 2026, an average 30-year fixed-rate mortgage rate stood at 6.58%. The Fed lowered the rate three times in 2025, but has kept the rate stable so far this year. “It’s not just about rates for homebuyers, but rather the full financial picture of buying,” said Lisa Sturtevant, chief economist at Bright MLS. “Home prices hit record highs this summer in many markets across the U.S. while higher gas prices and concerns about overall inflation rising have created more financial strain for would-be buyers.”

Here are some factors to consider when deciding whether to buy:

• Stability: Do your job and your paycheck seem secure? Do you intend to stay in one place for several years?
• Lifestyle: Can you afford the inevitable maintenance, repair, and insurance costs that come with owning a home?
• Savings: Do you have enough for the down payment, closing costs, moving expenses, and other expenses (e.g., title searches, home inspections, attorney fees)?
• Debt: How much debt (student loans, car payments, credit cards, medical bills) are you carrying?
• Credit: Is your credit score in the neighborhood of 740 or above?

“If your finances feel shaky — for example, you’re worried about job security or paying bills — it’s wise to hold off,” advises Abby Badach Doyle of NerdWallet. “If your income is steady and your budget says the numbers work, don’t let scary ‘what if’ headlines throw you off track.”

Know What You Can Buy

Before you set your sights on your dream home, do some research to answer the following questions:

• Can you increase your income, or reduce your expenses, or both?
• How much can you pay toward a down payment?
• Would you consider buying in a lesser-known area or an area further from your job?
• Are you looking for a fixer-upper, an older home, or new construction?
• Would you consider a condo or a townhome, rather than a single-family home? If so, don’t forget to factor in the HOA fees.
• Are you a veteran? If so, you might qualify for a VA loan, which has some advantages over a regular bank loan.
• Would a 15-year mortgage be more suitable than a 30-year mortgage for your situation?
• Would you consider an adjustable-rate mortgage, as opposed to the standard fixed-rate mortgage (with the commitment to refinance when the rate goes down)?
• Is a rate buydown — in which you pay up front to lower the interest rate — within your budget?

Seek Professional Help

The U.S. Department of Housing and Urban Development (HUD) works with non-profit organizations that counsel homebuyers. Check with the Consumer Financial Protection Bureau for guidance. Licensed real estate agents have expertise in local markets. Loan officers at banks and credit unions can help, as can real estate brokers licensed through the Nationwide Multistate Licensing System.

Prepare for a Worst-Case Scenario

A survey by Clever Real Estate found that nearly half of new homeowners struggled to make mortgage payments and took on additional debt because they:

• Purchased a home over their budget;
• Accepted a higher interest rate than planned;
• Compromised on their priorities, especially home prices; and
• Confronted excessive maintenance costs.

Although your basic mortgage payment will be locked in for the life of the loan, all other costs associated with buying and owning a home will increase over time. The best scenario for a homebuyer is for both interest rates and home prices to drop, but it is hard to predict when (or whether) those two factors will coincide. Experts can calculate potential trends based on past and current data, but you can’t plan to buy a house based on what the mortgage rate might be in three years.

“The truth is, the right time to buy is when it makes sense for you,” says Doyle.