At this point, it’s clear that mortgage rates won’t fall to 3% again in the near future, unless something drastic happens. However, many Americans would be happy if rates fell to even 6%. When could rates hit 6%, and should you wait for this decrease before buying a house?

Discover which mortgage lenders are offering the lowest interest rates this week.

To understand the full impact of today’s higher rates on buyers and borrowers, it’s essential to consider the steady rise in home prices over the years.

According to Census data, the median home price was $410,800 in Q2 2025. At a 6.26% mortgage rate — the average for a 30-year term as of Nov. 20 — you’d pay about $2,532 per month on a $410,800 mortgage loan.

And that’s just the mortgage principal and interest. It doesn’t even factor in homeowners insurance, mortgage insurance, or property taxes, which also add to your monthly mortgage payment.

If you took out a 30-year mortgage with a 6.26% rate, the money paid toward the principal and interest on a $410,800 loan in just one year would be about $30,384. This accounts for around half of the country’s median annual earnings. (Generally speaking, you shouldn’t spend more than 25% to 35% of your income on housing costs.)

Assuming you’re getting a 30-year loan term, here’s a look at what you’d expect to pay at various interest rates for a median-priced home today:

As you can see, the difference between a sub-6% rate and today’s rates is pretty significant. Interest rates have been hovering in the mid-to-high 6% range for a while. In this scenario, the difference between a 7% rate and a 6% rate would be $270 per month, or $3,240 annually.

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Unfortunately for borrowers, mortgage rates are not expected to decline this year. In its November forecast, the Mortgage Bankers Association (MBA) projected that the average 30-year mortgage rate will end 2025 at 6.3%. Fannie Mae has not released its November Housing Forecast yet, but its October forecast also predicts a 30-year rate of 6.3%.

The MBA expects rates to remain close to 6.4% in 2026, although Fannie Mae predicts rates will fall to 5.9% by the end of Q4 2026. Whether that happens, though, will depend heavily on inflation and the Federal Reserve’s response to it throughout the end of this year and 2026.

“I would expect mortgage rates to stay in the current range until we see what direction inflation is heading,” Jennifer Beeston, executive vice president of national sales at Rate, said via email.

The September Consumer Price Index (CPI), a key measure of inflation, was released in late October. The report revealed that annual inflation increased by 3%, up from the 2.9% rate in August. However, the annual increase was on par with economists' expectations. There will likely be no October CPI due to the aftermath of the government shutdown.

Learn about how inflation affects mortgage rates.

Looking further out, mortgage rates — at least on conventional loans — probably won’t fall below 6% until late 2026 at the earliest.

“In order for conventional mortgage rates to hit below 6%, we need to see a reduction in inflation as well as increased confidence in the continued containment of inflation, which is hard to currently envision given the macroeconomic and geopolitical outlook,” Beeston said.

Aside from tamped-down inflation, Taylor said unemployment would need to rise too.

“This would prompt the Fed to cut,” he said. “Global investors would also need to prove their belief in U.S. Treasury and mortgage bond safe-haven trades if geopolitical conflicts keep escalating, which would push bond prices up and mortgage rates down.”

Two factors also make things even more unpredictable: a potential replacement for Fed Chairman Jerome Powell mid-next year and the long-term impacts of Trump administration tariffs.

“Sub-6% rates are unlikely until we see the inflation impacts of tariffs,” Taylor said. “But rates in the 6% to 6.5% range are possible ahead of the Fed leadership switch in May 2026.”

Though significantly lower mortgage rates aren’t on the horizon anytime soon, there are still steps you can take to make getting a mortgage more affordable. Here are some tips for getting the lowest mortgage rate possible:

Improve your credit score: A higher credit score generally qualifies you for lower interest rates, as it indicates you’re a lower risk of defaulting on your mortgage.

Make a bigger down payment: When you make a larger down payment, your mortgage lender has less money on the line. The company may reward you with a lower interest rate in return.

Get a rate buydown: Mortgage interest rate buydowns allow you to pay a fee to temporarily reduce your interest rate, usually for the first few years of the loan.

Buy points: Mortgage discount points lower your interest rate for your entire loan term, but you’ll pay an up-front fee. You’ll pay these fees at closing.

Shop around: You can also compare loan quotes from several mortgage lenders. Freddie Mac estimates that getting quotes from at least four lenders can save you around $1,200 annually.

You can also explore a shorter loan term or an adjustable-rate mortgage, which may offer lower rates than the traditional, 30-year fixed-rate mortgage.

If you’re otherwise ready to buy a home but are holding out for lower mortgage rates, it might not be worth the wait. Interest rates probably won’t plummet anytime soon. And remember, you can always buy a house now to start building equity, then refinance into a lower interest rate later.

Could mortgage rates go back up to 7%? Signs to watch for.

According to its November Mortgage Finance Forecast, the MBA projects a year-end average rate of 6.3% on 30-year mortgages.

In its October Housing Forecast, Fannie Mae predicts that mortgage rates will drop to 5.9% by the fourth quarter of 2026. Many factors could change those projections, though, including Federal Reserve moves, inflation, tariffs, and employment data.

It is unlikely that mortgage rates will fall as low as 3% again. While this did happen in the post-pandemic years, it was largely due to the Federal Reserve’s need to spur economic activity after widespread shutdowns across the nation.

A $300,000, 30-year mortgage loan at a 6% interest rate would cost about $1,799 per month. (This only covers the principal and interest and doesn’t account for insurance or property taxes.) Across the entire 30-year term, you’d pay a total of $347,515 in interest.

Laura Grace Tarpley edited this article.

Now that the government shutdown has finally come to a close, where are mortgage rates heading long-term? Mortgage interest rates are determined by several factors, with the 10-year Treasury yield being a primary one. At Yahoo Finance, we’ve designed a five-year mortgage rate forecast, built on a 10-year yield correlation, that provides some insight.

MORE: Learn about the best mortgage lenders right now.

Mortgage rate forecasts might best be derived from 10-year Treasury note trends. While the two rates often track in the same direction, there is a spread between them that we will account for below.

First, let's understand where Treasury yields are headed in the next five years. We'll combine human analysis with data pulled from artificial intelligence to put together a prediction.

Michael Wolf is a global economist at Deloitte Touche Tohmatsu Ltd. In June, the Deloitte Global Economics Research Center issued an updated U.S. economic forecast in which Wolf laid out the firm's Treasury yield expectations over the next five years.

"We expect the 10-year Treasury yield to hover near 4.5% for the remainder of this year, despite a softening in economic data and a 50-basis-point cut from the Fed in the fourth quarter of 2025," he wrote. "The 10-year Treasury yield begins to decline slowly in 2026, falling to 4.1% by 2027 and remaining there through the end of 2029."

Let's chart that forecast.

That's not much movement. Goldman Sachs analysts agree, saying the 10-year Treasury will remain near 4.1% through 2027.

Meanwhile, the Congressional Budget Office (CBO) forecasts the Treasury yield to be 4.1% by the end of 2025, down to 4% in 2026 and remaining near 3.9% through 2029.

Learn why mortgage rates increased after the Federal Reserve rate cut.

As we mentioned up top, the 10-year Treasury and 30-year fixed mortgage rates are separated by a spread. That difference between the two has been on either side of 2.5 percentage points in recent years. That's a significant change when compared to the spread from 2010 to 2020 when it was under two percentage points — and often near 1.5.

Using a 2.5 percentage point spread, here's an example of how Treasurys and mortgage rates compare:

10-year Treasury rate = 4%

Spread = 2.5 percentage points

Mortgage rates = 6.5%

Here's a recent example: As of Nov. 14, the 10-year Treasury yield opened at 4.06%, and the 30-year fixed mortgage rate was 6.24%. The spread was 6.24 - 4.06 = 2.18 percentage points.

The latest version of artificial intelligence, GPT-5, suggested using a spread of 2.1 to 2.3 percentage points. Here is its rationale:

Historical standard (2010s): ~1.7 pp

Recent years (2022 to 2025): ~2.6 pp

Estimated 5-year average spread: ~2.1 to 2.3 percentage points

Using these spread estimates, we can now complete our five-year mortgage rate forecast.

Here are 8 strategies for getting the lowest mortgage rate possible.

Using the Treasury forecast from above, we add the spread between the bond market and 30-year fixed mortgage rates to compile a five-year forecast:

Read about when mortgage rates will go back down to 6%.

Of course, these are long-range estimates based on historical norms and broad expectations. All of these numbers could be thrown out the window if any of the following happens:

10-year Treasurys outperform or underperform the forecast. For example, yields could crash in a severe economic setback, such as a recession.

The spread between Treasurys and mortgage rates narrows — or dramatically expands.

Monetary policy, as driven by the Federal Reserve, substantially changes.

Discover the mortgage lenders with the best interest rates this week.

There is no forecast that predicts a 3% mortgage rate in the next five years. However, who saw such low home loan rates on the horizon in 2007 when rates were about where they are now? Things like the Great Recession and a global pandemic are rarely on the radar, and such drastic events are what it takes to move mortgage rates into the cellar.

The analysis above predicts 2027 mortgage rates to be around 6.2% to 6.4%.

Based on the estimates above, mortgage rates are not expected to drop significantly in the next five years. However, a recession or other unknown disruption to the economy (such as a financial collapse or pandemic) could change the outlook.

If you are considering an adjustable-rate mortgage with an initial fixed-rate period, you'll first want to consider how long you'll actually remain in the house you are financing. Then the long-term mortgage rate forecasting begins. The best approach is probably to select the initial term that best suits your current budget.

Laura Grace Tarpley edited this article.

A poor credit score can make many financial transactions more difficult and expensive. However, with the right loan product and a knowledgeable mortgage lender, you probably have more mortgage options with a bad credit score than you’d imagine. Here are our top choices for mortgage lenders for borrowers with bad credit in November 2025.

Why PNC mortgages stand out: PNC is one of the best mortgage lenders out there for FHA loans, the leading loan choice for borrowers with lower credit scores.

Availability: All 50 states and Washington, D.C.

Types of low-credit-score loans: FHA, VA, and USDA.

Minimum credit scores: 600 for FHA, VA, and USDA loans.

Minimum down payments: 3.5% for FHA, 0% for VA, and 0% for USDA loans.

Not only is PNC a leading national FHA lender, it super-serves eligible households with grants from $10,000 to $15,000 that can be applied to FHA closing costs.

Ranks well for customer satisfaction according to the latest J.D. Power mortgage originator survey.

PNC makes getting a sample mortgage rate simple and useful. All you have to provide is a little information, and the results are not dependent on contact from a mortgage rep.

PNC's minimum credit score of 600 for an FHA loan is still relatively low, but it’s higher than the 580 minimum the FHA requires with a 3.5% down payment. Some lenders allow a FICO 500 with a 10% down payment.

PNC offered near-median mortgage rates to borrowers in 2025. Not high, but just run-of-the-mill.

Why Pennymac mortgages stand out: A top-five lender of VA loans by volume, Pennymac's low credit score requirement makes it even more competitive.

Availability: All 50 states and Washington, D.C.

Types of low-credit-score loans: FHA, VA, and USDA.

Minimum credit scores: 580 for FHA, 580 for VA purchase, 620 for VA cash-out refinances, no minimum for VA IRRLs, and 580 for USDA loans.

Minimum down payments: 3.5% for FHA, 0% for VA, and 0% for USDA loans.

The VA doesn’t set a minimum credit score for VA loans, but mortgage lenders do. Of the VA lenders we've reviewed, Pennymac has one of the lowest minimum credit requirements.

Pennymac offers a 1% buydown to reduce your interest rate for the first year of your loan, in addition to a $1,000 closing bonus.

With outstanding educational resources, it earns our highest rating in our Online Features category.

Pennymac had a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power Mortgage Origination Satisfaction Study.

Why Rate mortgages stand out: Allowing a slightly higher debt-to-income ratio than other lenders in this category, Rate (previously Guaranteed Rate) gives a break to modest-income households.

Availability: All 50 states and Washington, D.C.

Types of low-credit-score loans: FHA, VA, USDA, and non-qualified mortgages.

Minimum credit scores: 550 for FHA, no minimum for VA, 620 for USDA, and not specified for non-qualified loans.

Minimum down payments: 3.5% for FHA, 0% for VA, 0% for USDA, and not specified for non-qualified loans.

In 2024, Rate allowed the highest median debt-to-income ratio (46%) among Yahoo Finance's best-rated FHA lenders. That debt flexibility gives borrowers more leeway.

For face-to-face service, Rate has hundreds of branch locations.

According to a Yahoo Finance analysis, Rate offered higher-than-median interest rates and loan costs to borrowers in 2024.

Rate has a below-average score for customer satisfaction, according to J.D. Power.

Why Guild Mortgage stands out: Prospective home buyers without a credit score or with a thin credit file may qualify with rent, utilities, and car insurance payment histories.

Availability: 49 states (excluding New York) and Washington, D.C.

Types of low-credit-score loans: FHA, VA, USDA, and the Complete Rate program.

Minimum credit scores: 540 for FHA, 540 for VA, 540 for USDA, and no credit score for the Complete Rate program.

Minimum down payments: 3.5% for FHA, 0% for VA, 0% for USDA, and varied by loan type for the Complete Rate program.

Guild accepts alternative forms of credit from home buyers who don’t have a credit score. The Complete Rate program uses a review of bank deposits and payment histories from rent, car insurance, and utilities.

The Complete Rate program applies to multiple types of mortgages, including FHA, VA, and USDA loans.

The MyPath2Own program helps first-time home buyers who can't yet qualify to buy because of credit or debt issues become "mortgage ready" with education and down payment assistance.

Guild Mortgage falls short in customer satisfaction, with a below-average rating by J.D. Power.

Guild offered below-median interest rates and well-above-median loan costs to borrowers in 2024.

Why Rocket Mortgages stand out: Always an innovator, Rocket's new RentRewards program provides a financial lift to renters looking to buy.

Availability: All 50 states and Washington, D.C.

Types of low-credit-score loans: FHA and VA.

Minimum credit scores: 580 for FHA, and 580 for VA loans.

Minimum down payments: 3.5% for FHA, and 0% for VA loans.

Rocket Mortgage's RentRewards program offers savings up to $5,000 on closing costs, based on 10% of the annual rent you pay.

Rocket is straightforward about the credit scores it accepts for each type of mortgage loan. Some lenders don't even disclose the credit scores they are willing to consider.

Rocket ranks above average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.

In 2024, Rocket offered median interest rates but much higher-than-median loan costs.

Sample mortgage rates are reduced with up to two discount points.

Read our complete Rocket Mortgage review.

Why New American Funding stands out: New American Funding caters to underserved households. One major way it does this is by offering non-qualified mortgages to borrowers with histories of foreclosures or bankruptcies, events that can bring down your score for years.

Availability: All 50 states, Washington, D.C., and Puerto Rico.

Types of low-credit-score loans: FHA, VA, USDA, and non-qualified mortgages.

Minimum credit scores: 580 for FHA, 580 for VA, 580 for USDA, and 620 for non-qualified mortgages.

Minimum down payments: 3.5% for FHA, 0% for VA, 0% USDA, and unspecified for non-qualified mortgages.

NAF uses non-qualified mortgages to help borrowers with recent foreclosures or bankruptcies secure a mortgage.

The lender sponsors Black and Latino programs to encourage and facilitate homeownership.

Advertising rates are impressively low when compared to market averages. We found the reason why: The website displays mortgage rates that are lowered with three discount points. Discount points should be a borrower's option, not a lender's promotion.

In an article on qualifying for a loan, an NAF representative says, "If you have a lower credit score, try first to get over 580, which is the bare minimum for an FHA loan." That may be the case with New American Funding, but some lenders accept a FICO 500 with a 10% down payment on an FHA loan.

The very minimum credit score to buy a house is a FICO 500. That's for an FHA loan with 10% down. If you can only put together a 3.5% down payment with an FHA loan, you'll need a 580 or higher. To have more loan options and perhaps a better mortgage rate, a credit score of 620 is required.

For most Americans of modest means, the best loan program is a mortgage insured by the FHA. With easier credit hurdles and built-in low down payments, FHA loans have helped millions of borrowers with credit issues buy a home.

If you have a military connection, you should look into a VA mortgage. Backed by the Department of Veterans Affairs, VA loans usually require no down payment and have flexible credit qualifications.

USDA loans can be a good choice for aspiring homeowners with bad credit who are looking in rural and suburban areas. USDA loans are aimed at low- and moderate-income households and have lenient credit score minimums.

It takes time to improve your credit score, so there are no shortcuts. Some tried-and-true methods include:

Reduce the debt you owe. Aim to use no more than 30% of your available limit on credit cards.

Pay on time; in fact, pay more often. Making more than one payment a month on your debt may seem impossible, but even if you pay the same amount but make one payment early and another on time, you'll reduce your balance faster and pay less interest.

Don't apply for any new accounts. Each credit inquiry can cause your credit score to dip a little.

Check your credit report at least annually. Look for lingering errors.

Track your credit score. Enjoy the steady progress and gamify the process.

One downside of having bad credit: Mortgage lenders price in the risk they're taking with a higher interest rate. That's why talking to more than one lender is so important. Each mortgage provider has its own lending and pricing procedures. One lender may want your business more than another and offer you a better mortgage rate.

A score below 620 is the dividing line between a conventional loan and most government home loans. FHA loans can serve borrowers with credit scores as low as 500. The higher your score and the greater your down payment, the better your loan terms will likely be.

The easiest mortgage to get with bad credit is an FHA loan. You can qualify with a score as low as 580 with a 3.5% down payment, or as low as 500 with 10% down.

Yes. In addition to a higher mortgage interest rate, you will likely pay more in mortgage insurance and perhaps additional closing costs.

Yes. Many lenders work with state and local housing assistance programs to obtain grants, vouchers, and other concessions for borrowers with bad credit. Ask each lender you speak to how they can help you find assistance programs. You can also use this NCHSA tool to find housing assistance and finance agencies near you.

Yes, it’s possible to buy a house with a 500 credit score. You can qualify for an FHA loan with a score as low as 500 — but you must have a 10% down payment. Otherwise, FHA loans require a 580 credit score with a 3.5% down payment.

Yahoo Finance reviews mortgage lenders based on five primary considerations: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, we analyze mortgage lenders based on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and total loan costs are compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We also consider whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.

Advertisers or sponsorships do not influence ratings.

Editorial disclosure for mortgages:

The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.

Laura Grace Tarpley edited this article.

Changes are slowly filtering through the U.S. housing market. Mortgage rates have gradually decreased over the last 12 months. Sellers are discounting list prices, and even though the government shutdown has ended, it has left lasting impacts on the housing market, resulting in slower closing times. Considering all of the factors that exist right now in the 2025 housing market — is it a good time to buy a house?

MORE: See our top picks for mortgage lenders for low or no down payments.

Good news for anyone who wants to buy a house before the end of 2025: There are positive signs of improvement. According to the Realtor.com October 2025 Housing Market Trends Report, there are indications that the real estate market has become more balanced since 2024.

More homes are on the market. The supply of houses for sale has grown for 24 straight months — exceeding 1 million active listings for six consecutive months.

In October, over 20% of listings featured price reductions. The Northeast was the region with the fewest price cuts, likely caused by fewer new construction opportunities.

The median number of days homes were on the market rose to 63 days in October. That's five days longer than this time last year and one more day than in September.

The longer listings remain active, the more choice buyers have. The increased time on the market is likely triggering those seller discounts we mentioned above too.

According to Freddie Mac, the highest rate over the same period has been 7.04%. Right now, they’re at their lowest point of the year: 6.17%. While that may still feel high compared to 2020 and 2021 rates, at least interest rates are currently staying well below 7%.

The Federal Reserve cut the federal funds rate again at its Oct. 29 meeting — but if history is any indication, this move probably won’t push home loan rates down. However, mortgage rates could decrease if factors surrounding the government shutdown lead to a lower 10-year Treasury yield. Mortgage rates tend to follow the 10-year yield more closely than the fed funds rate.

To navigate today's mortgage rates, consider:

More than half of home loan borrowers (56%) only get a preapproval from one lender. That reduces your bargaining power and limits the opportunity to find a better interest rate from a more business-hungry lender. Zillow research says that 45% of first-time home buyers who shopped with multiple mortgage lenders got a better rate.

Putting down a larger down payment can earn you a better mortgage rate.

Some buyers get below-market mortgage rates by negotiating a buydown or special financing from a seller or builder.

Take action: Use a mortgage calculator to determine the monthly payment you can afford. You can then learn the home price, down payment, credit score, type of home loan, and mortgage interest rate to meet your home-buying goal.

Learn how to get the lowest mortgage rates.

New home construction has grown, with 1.63 million homes added to the inventory in 2024. Even so, the U.S. housing shortage is at an all-time high of 4.7 million units, according to Zillow's analysis of Census data.

"The unfortunate fact is that we still don't have enough housing in this country for people who need it. Construction has helped prevent the housing deficit from ballooning, but it hasn't yet begun to close the gap," Orphe Divounguy, senior economist at Zillow, said in a release.

Take action: If the area you love is too expensive, consider expanding your search to more affordable areas near your favorite neighborhood.

How much house can I afford? Use the Yahoo Finance affordability calculator.

According to the U.S. Census Bureau, new home sales increased by 4% in August compared to the same period a year ago. However, month-over-month sales were down by 1.4%.

Realtor.com expects 1.1 million new homes to be built this year. That's nearly a 14% increase over 2024 — with builders focusing on smaller, more affordable houses.

Take action: If you want to buy a house now, consider buying a new construction home. You may be able to choose from some finishes or negotiate a better deal on a spec home that has been on the market for a while.

Yes, the government shutdown has ended. However, it’s going to take some time for the housing market to recover. During the shutdown, the FHA and VA were operating with smaller staffs than usual, which often slowed down the time between applying for a mortgage and closing on the house. USDA loans weren’t being processed at all. Now, these departments need to catch up on applications.

Take action: Unlike government home loans, conventional loans didn’t face many issues during the shutdown. If you qualify for a conventional loan with favorable terms, applying for this type of mortgage could result in the smoothest process.

To answer the question of whether it's a good time to buy a house for you personally, you must look beyond broad market forces. Buying a home is more than considering macroeconomic factors. It's an important life decision based on your personal and financial situation.

When you rent, the decision to move is broken down into six months, or a year or two at a time, as your lease renews. But every dollar-related detail makes a home purchase a medium- to long-term investment. Buying a house includes various costs: the down payment, closing costs, and financing fees, moving expenses, property taxes, and perhaps selling the house you're in now.

Homeownership requires a long timeline. How you make a living, your friends, family, and even community amenities all come into play.

A primary consideration: your job. Will it require a location change anytime soon, or can you live where you please? Is your income steady and all but assured?

One of the significant factors that will qualify you for a home loan is your credit score. It's important to know it before applying for a mortgage.

For the most common loan, a conventional mortgage not backed by a government agency, you generally need a FICO Score of 620 or better.

FHA loans can allow a credit score as low as 580 with 3.5% down. VA loans issued to qualified military service members and veterans don't officially have a minimum credit score, though some lenders will require a FICO Score of 620.

Of course, minimum credit scores are the entry-level to qualifying; the higher your score, the better the loan terms you'll be offered. Most importantly, that can mean you'll pay a lower annual percentage rate over the life of the loan. You may also have more room to negotiate on fees.

As a benchmark to where you stand, the median credit score on a new mortgage in the second quarter of 2024 was 772, according to the New York Federal Reserve.

See the average mortgage rate by credit score.

A primary financial metric lenders will use to determine your creditworthiness is your debt-to-income ratio.

Fannie Mae, a government-sponsored entity that provides liquidity to the home loan market, looks for a maximum total DTI ratio of 36% of "the borrower’s stable monthly income." Exceptions can allow for total DTIs up to 50%, but it's usually best to avoid working on the edges of qualification if you can.

You can calculate your DTI by dividing your total recurring monthly debt by your gross (before taxes and other deductions) monthly income.

Include debt such as monthly mortgage payments (or rent), real estate taxes, and homeowners insurance. Also, include any car payments, student loans, and the minimum monthly payment due on credit cards. Remember any personal loan payments, child support, or alimony.

Do not include debt such as monthly utilities — like electricity, water, garbage, or gas bills — or car insurance, television streaming subscriptions, or cell phone bills. You can also exclude health insurance costs and miscellaneous expenses such as groceries or entertainment.

Having a cash cushion in the form of emergency savings shows lenders that you are prepared for the unexpected. Of course, that savings account should also include …

A large chunk of your savings account should be dedicated to the down payment. A minimum down payment of 3% is required to qualify for a conventional loan targeted at first-time home buyers — or ideally, 20% to avoid private mortgage insurance. Yes, zero-down options exist if you are eligible for a VA- or USDA-backed loan.

According to Realtor.com, the median down payment in the fourth quarter of 2024 was 14.4%.

Buy smart and shop a lot. Relentlessly shop interest rates and mortgage lenders for the best loan offers and justified fees. Get a written preapproval from your lender, then shop for a house you can love and can afford. Your home buying competition is.

According to Zillow, when it comes to first-time buyers versus repeat buyers, first-timers are more likely to reach out to at least three lenders and three real estate agents.

MORE: Learn about the best mortgage lenders for first-time home buyers.

Mortgage rates tend to fall during economic downturns, so a recession would definitely qualify as a time when rates would likely drop. However, lower rates generally increase demand as more buyers enter the market, so house prices would likely rise. Buying a house at a time when both mortgage rates and home prices are favorable is a challenge. You probably shouldn’t try to time the housing market by waiting for a recession. Buy when it makes sense for you personally.

"Buy now" advocates might argue that if you find the right house at the right price — and you're financially stable — you should purchase the home now and consider refinancing later. But what if mortgage rates don't drop substantially enough to justify a refinance in a few years? Only buy a house when you are comfortable with the terms you can get on closing day.

There are pros and cons to buying in today's housing market. For example, inventory is improving, but the aftermath of the government shutdown continues to contribute to delays in closing FHA and VA loans. Deciding whether it's a "smart" time to buy a house is less about timing the real estate market and more about evaluating your financial situation. Can you comfortably afford the down payment, closing costs, and monthly mortgage payment? Do you expect to stay in the home long enough to recoup the money you pay up front? Then it could be a smart time for you to buy a home.

Locking in a mortgage rate is a short-term decision, generally lasting only 30 to 60 days — sometimes up to six months. There's little reason to agonize over it. Be comfortable with the rate on your Loan Estimate and start packing boxes.

Homes become more affordable as your income and savings grow. Ask any homeowner: Buying that first house was a stretch. The monthly payment loomed large. As months and years go by, it becomes less of an issue. Then, as home prices continue to rise, you're on the right side of the equation: The growing home equity builds your net worth.

Laura Grace Tarpley edited this article.