President Donald Trump recently announced a new initiative in an attempt to loosen America’s tight housing inventory. His idea is to prohibit large investment companies from buying single-family houses moving forward. So, would this rule actually move the needle and make homes more affordable for families? Here's what experts believe.

MORE: Learn how to buy a house when your income is low.

Trump's proposal on Truth Social was a ban on large institutional investors from buying more single-family homes. The president believes removing private equity firms and similar investors from the market will allow more first-time home buyers to enter the market.

A 2024 report by the Government Accountability Office said that institutional investors "may have contributed to increasing home prices and rents and helped stabilize neighborhoods following the financial crisis." However, the impact on "homeownership opportunities" was unclear.

Cotality, a real estate analytics firm, reported in November that investor activity rose from 29% in June 2025 to 30% in September 2025.

"This upward trend continues to build on the elevated market share controlled by investors since late 2024 and represents a year-over-year increase of three percentage points," the analysis found.

Yet, the impact of Wall Street investors, such as private equity firms, is a matter of debate. Investment groups may not be as threatening to the would-be home buyer as some think.

In an October 2025 analysis, Realtor.com said, "Even in states with the highest rates of investor ownership, it’s not institutional buyers driving the trend."

More than 90% of investor-owned single-family homes were in the hands of small investors who owned less than 11 properties, Realtor.com noted, referring to data from CJ Patrick Co. and BatchData.

The states with the largest share of investor-owned homes included Maine, Montana, Alaska, and Hawaii.

"Yet the overwhelming majority of that housing stock is in the hands of individuals and small partnerships, not mega investors," the real estate association reported.

Learn more about how real estate investment groups make money.

While investment activity may have played a part, the housing shortage has evolved from more than one contributing factor. Higher home prices and elevated mortgage rates are surely in the mix.

Another — and surprising — pressure point may be locally based.

Research from Wharton real estate professor Joseph Gyourko and Harvard economics professor Edward Glaeser points to the tightening of local building restrictions.

The professors found that while home building boomed in the 1950s and '60s, over the next three decades, construction fell by half. That trend continues today.

Local governments, particularly in the Sunbelt, are hampering home construction with restrictive zoning and permitting laws to "slow and stop new developments," the research concluded.

“I think the most important thing is change at the local level," Gyourko said. “There has to be a recognition that these high prices are largely — not totally — due to restrictive permitting and higher regulation at the local level.”

The matter of regulatory burdens resonated with Ed Brady, the president and CEO of the Home Builders Institute.

"That is probably very close to the top of the list of challenges with communities that are struggling with affordability — restrictions put on by cities, states, or municipalities," Brady said. "That is the reason that 25% of the cost of a single-family home in America is regulatory issues — $100,000 of a $400,000 house is a regulatory burden, soft costs that don't go into the sticks and bricks of the construction. That's a huge burden."

Learn how to buy and finance a new construction home.

What would be the impact of less institutional home investing?

"It would likely put downward pressure on prices by reducing demand in the market," said Cotality principal economist Thom Malone. "However, institutional investors historically account for only a small share of total home purchases — around 1% to 2% — so the overall impact on prices would probably be modest."

Malone also noted that restricting institutional activity would reduce supply in the single‑family rental market, which would likely make it more expensive to rent. "There is also the question of how builders would respond: With fewer buyers, construction activity could slow, blunting any downward pressure on home prices," Malone added.

Realtor.com senior economist Jake Krimmel believed the Trump proposal is unlikely to move the needle on affordability.

"The affordability crisis is fundamentally a supply problem, and meaningful relief requires adding homes, both through new construction or through inventory gains in chronically constrained markets," Krimmel said. "Large corporate ownership is a red herring in the broader supply debate."

Discover whether now is a good time to buy a house.

While Trump's initiatives certainly feed the "somebody has to do something" frustration of hopeful home buyers, no one disputes that the housing shortage will demand more than one solution.

"You're not going to get an overnight fix on the affordability issue," HBI's Brady said. "We've lost a big segment of the population that has been the traditional first-time home buyer because they can't afford it. With regulatory burdens, land use, tariffs, trade, all those things, it's a perfect storm where the price of housing is just too high."

Any effort by the government or the housing industry to expand home affordability is worth keeping tabs on. In the meantime, you can tip the scales of owning a home in your favor by taking some empowering action of your own.

Save more for a down payment. With more money down, you will get a lower interest rate and more favorable loan terms.

Reduce debt. A lower debt-to-income ratio (DTI) will make you a more attractive borrower.

Shop with several mortgage lenders. Apply for preapproval with three or four lenders to compare not just their interest rates, but also their fees. This strategy helps you find the best deal.

Know your credit score. While there are many credit scoring models, knowing your score from any one of them will help you set your expectations for the interest rate you may earn. You can also track the savings you might gain by improving your score.

Explore loan options. Government home loans, such as FHA, USDA, or VA mortgages, can enhance affordability by allowing lower down payments and flexible credit hurdles.

See if you qualify for home-buying assistance programs. Down payment assistance programs and closing costs grants are available to households in specific areas and within qualifying income limits.

Look for interest rate buydowns. Some lenders and new home builders offer limited-time rate discounts. You can also run the numbers on buying discount points to lower your mortgage rate.

Mortgage rates continue to remain in a narrow range into 2026. The 30-year fixed mortgage rate has hovered within 11 basis points of its 2025 low since October 23. The national average 30-year rate is now 6.16%, according to Freddie Mac. So, what does this mean for the 2026 housing market? Will mortgage rates continue to go down?

Want to buy a house in early 2026? Here’s how to prepare.

Mortgage rates have generally been falling since the end of May. Weekly moves are small, but longer-term changes are more apparent. However, rates stubbornly remain just above 6%.

As of January 8, Freddie Mac reported that the average 30-year fixed-rate mortgage rate is just one basis point above its 2025 low of 6.15%. The 30-year rate is now 77 basis points lower than it was this time last year. Going into 2025, mortgage rates averaged 6.931%.

The average 15-year fixed mortgage rate this week is 5.46%. It is 68 basis points lower than this time last year.

In situations like these, it pays to look at the numbers. Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of Dec. 31, 2025:

30-year fixed-rate mortgage: 6.15% to 7.04%

15-year fixed-rate mortgage: 5.41% to 6.27%

Current rates on 30-year and 15-year fixed-rate mortgages are both fractionally above their 2025 lows.

Discover the lenders with the best mortgage rates this week.

President Trump has made a bold proposal to unfreeze mortgage rates from their over 6% perch. He is pushing Fannie Mae and Freddie Mac, the government-sponsored enterprises that provide capital to the mortgage market, to buy billions of dollars in mortgage bonds.

The idea is to tighten the spread between mortgage rates and 10-year Treasurys (as explained below).

"This could bring rates down in the short run by a small amount, but to really move mortgage markets, you would need large, sustained, and credible asset purchases," said Realtor.com senior economist Jake Krimmel.

The Federal Reserve lowered the fed funds rate three times in 2025. So, what does this mean for mortgage rates in 2026?

When the Fed — the common nickname for the Federal Open Market Committee (FOMC) — held its September 2025 meeting, it voted to lower the federal funds rate by 25 basis points. Then, it announced its second 25-bps cut of the year at its October meeting and third at the December meeting.

That federal funds rate tends to directly influence rates on shorter-term lending. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed fund rate trends. So, if the fed funds rate goes down, mortgage rates will likely follow. The inverse is also true.

When people anticipate a fed funds rate cut, mortgage rates usually fall in the weeks leading up to the meeting. However, home loan rates don’t necessarily continue to decrease after a fed funds rate cut.

In 2024, mortgage rates plummeted throughout August and early September as people expected the Fed to lower its rate at the bank’s September meeting. But mortgage rates stopped decreasing significantly after this meeting — and after the two additional rate cuts later that year.

The same seems to have happened in 2025. Mortgage rates gradually declined in the weeks leading up to the September meeting when people expected the Fed to lower its rate, and even though the fed funds rate did go down, mortgage rates bounced back up.

The Fed has indicated that it plans to cut its rate once in 2026. Due to several factors, including the public’s negative sentiment regarding this news, there’s also a good chance that rates won’t fall too drastically next year.

Dig deeper into how the Federal Reserve affects mortgage rates.

While short-term lending rates closely follow the fed funds rate, mortgage rates more closely follow the 10-year Treasury yield. As of January 8, the 10-year Treasury yield closed at 4.18% — down from 4.77% a year prior.

Now, you’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?

To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the rate on the 10-year Treasury. Without getting too much into the weeds, charging a spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.

For example, the average 30-year fixed mortgage rate is 6.16%, and the 10-year Treasury yield is 4.18% — a spread of 1.98%. A year ago, the 30-year rate was 6.93%, and the 10-year yield was 4.68%, resulting in a spread of 2.25 percentage points. Today’s spread is smaller, which is one reason mortgage rates are lower now.

Follow these 8 tips to get a mortgage rate under 6%.

In short, no. You probably shouldn’t wait to buy a home until mortgage rates drop to 6% or lower. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, a factor of housing supply and demand.

The current housing market is in a crunch. To put it simply, buyers outnumber homes for sale, especially homes in price ranges accessible to the first-time home buyer. When supply and demand are out of balance like this, home prices tend to remain high since sellers know they’ll have multiple buyers interested.

According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has generally trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $410,800 by Q2 2025.

Even in the event of a recession, prospective buyers likely won’t see much relief. If interest rates drop like they tend to do in recessions, that will increase the number of people looking to buy and lock in a lower interest rate. That drives up demand for the already limited supply of homes.

To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are inching down, and housing prices are stagnant or even lowering in certain parts of the country. Situations may be improving for buyers.

Learn how mortgage rates respond during a recession.

If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.

Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.

There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.

You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.

If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the cost of renovations into an escrow account. As you make repairs, funds get dispersed.

How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.

While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.

While the monthly payment on a 15-year mortgage will be higher than the typical 30-year, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.

To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary (for your loan's first one to three years, for example). Even a few years of lower rate relief can make today’s home prices more affordable.

Read about the 5-year mortgage rate predictions.

Expert opinions differ on what mortgage rates will do over the next year or so. The Mortgage Bankers Association (MBA) predicted in its December forecast that the 30-year fixed rate would stay at 6.4% throughout 2026, then oscillate between 6.3% and 6.4% in 2027. However, Fannie Mae’s December Housing Forecast put the 30-year rate at 5.9% by the end of 2026 and predicted it would remain stagnant throughout 2027.

Compared to historical mortgage rates, 7% isn’t considered a high rate. While it might be high compared to pandemic-era rates that were sub-3%, it’s on par with mortgage rates in the 1990s, and considerably lower than the double-digit rates seen in the late 1970s and early 1980s.

It’s not impossible to get a 3% interest rate, but doing so requires the perfect set of circumstances. You’d need to find a homeowner with an assumable mortgage — one that can be passed to a new owner at the same interest rate as the original loan. Assumable mortgages are generally government-backed loans from agencies like the VA, FHA, or USDA.

Laura Grace Tarpley edited this article.

The president may not control mortgage rates directly, but he certainly influenced them recently. When President Trump proposed two new home affordability initiatives, mortgage rates plunged. Will they remain lower? And what are these proposals?

MORE: See the mortgage lenders with the best interest rates this week.

Presidents don’t have the authority to set industrywide interest rates, nor can they legally require lenders to set their rates in a certain manner.

However, two recent Trump proposals caused the bond market to take notice.

One aimed to ban large investors from investing in single-family real estate. The president believes that barring private equity firms and other institutional investors from buying residential homes would boost affordability for families, especially first-time home buyers.

The other initiative directed government-sponsored Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. Fannie and Freddie provide capital to lenders, and the president said that the bond purchases would lower mortgage rates.

Mortgage rates fell in response to the news on Friday, January 9. Zillow reported the 30-year fixed mortgage rate at 6.05% before the announcements, 5.91% soon after, and 5.89% on the Monday following.

Policies that impact home prices, housing, or supply and demand are another way the president can have a hand in mortgage rates, as has been the case with recent events.

Typically, when home-buyer demand or housing prices are high, mortgage lenders increase the rates they charge customers. When demand is low or supply is oversaturated, they may lower rates to drum up more business.

Potential policies that could impact supply and demand include:

Tariffs, as they impact the costs home builders face for materials

Homebuilding initiatives, such as former President Biden’s Housing Supply Action Plan

Home-buying incentives, like the proposed First-time Homebuyer Tax Credit

Affordable housing initiatives, which impact what buyers pay for their homes

Even seemingly unrelated policies can impact the housing industry and indirectly affect mortgage rates. Immigration policies, for example, can have a trickle-down effect, particularly if they significantly impact the availability or cost of labor for homebuilders.

The Federal Reserve also plays a big role in interest rates. The federal funds rate — which is the rate banks pay to borrow money from each other — is the foundation on which most consumer interest rates are based.

Just think: If a bank is paying more to borrow money, they’ll need to charge customers more as well. Therefore, when the Fed increases its federal funds rate, the rate on most consumer products also tends to rise. When it falls, consumer rates — including mortgage rates — often follow suit.

(Lately, this effect is seen in the weeks preceding an anticipated Fed rate cut, with mortgage rates falling in anticipation of a lower Fed rate, not necessarily after.)

How exactly does the president play a role in all this, though? First, the president nominates the Fed’s chair — the person who reports to Congress on behalf of the Fed, meets with the Treasury secretary, and provides post-meeting commentary to the public. They also nominate the members of the Fed’s Board of Governors.

Both parties play a significant role in shaping the Fed's actions and policies. Although the Senate must ultimately confirm the president’s nominations, it does grant the sitting president some influence over interest rates.

How does the Federal Reserve rate decision impact mortgage rates?

Another significant influencer on mortgage rates is the 10-year Treasury yield, which represents the rate at which 10-year Treasury bonds are being paid to investors. Long-term mortgage rates tend to move in the same direction as the 10-year yield, so when the Treasury yield is up, mortgage rates typically also rise. When the yield falls, so do rates.

As with the fed funds rate, the president doesn’t directly influence the Treasury yield. However, the moves made by their Fed appointees, as well as their own public statements, remarks, and policy priorities, do factor in.

Why? Because all of these can heavily influence investor sentiment. For example, if investors fear economic trouble is brewing, they’ll be more tempted to buy into the safety of government bonds, which sends demand for Treasurys up and yields down.

A more stable economy and strong feelings of financial security can have the opposite effect, drawing investors away from Treasurys and into riskier investments. Treasury rates then rise to attract more investment.

The president’s economic policies also have the power to impact the mortgage rates you see. Tax cuts (or increases), for example, affect the amount of pocket money Americans have and, therefore, how much they can contribute to the economy. This directly contributes to inflation and the Fed’s decisions about interest rates.

Other economic policies, such as tariffs, come into play, as they influence the prices consumers pay for various goods and services and, as a result, Americans’ spending and the U.S. inflation rate.

Generally speaking, when inflation is high, the Fed tends to increase rates to tamp down economic activity. When it’s low, it may opt for rate cuts instead. This keeps consumers borrowing and money flowing into the economy.

Discover how inflation affects mortgage rates.

Despite recent declines, most buyers and refinancers would probably like to see mortgage rates creep a little lower. Fortunately, waiting for policy changes or Federal Reserve moves isn’t your only option.

In fact, there are several strategies you can use to get a lower mortgage rate all on your own. Here are some options:

Increase your credit score: Mortgage lenders usually reward higher credit scores with better interest rates, because a high score communicates that you’re more likely to make your payments. To improve your score, pay down your debts, make on-time bill payments, and keep your oldest accounts open to increase your credit age.

Buy discount points: Buying mortgage discount points essentially means purchasing a rate reduction. You pay a set fee per “point” at closing, which directly lowers your mortgage rate by a fractional amount. You’ll enjoy this lower rate for your entire loan term.

Consider a temporary rate buydown: This is similar to buying points, though the lower rate only lasts for a few years or less. You may receive a lower rate for the first one, two, or three years of the loan, after which your rate will revert to your originally quoted rate (or you can refinance). While you may have to pay for the buydown, this cost is often covered by the seller, lender, or homebuilder.

Shop for the best mortgage lender: Rates vary by mortgage lender, so be sure to obtain quotes from at least three or four lenders. According to Freddie Mac, getting quotes from at least four lenders can save you over $1,200 per year.

Making a larger down payment can also help you get a lower interest rate, but be careful about dipping too much into savings. You’ll want a solid emergency fund on hand to cover repairs and home maintenance needs as they arise.

Mortgage rates are determined by several factors, including Federal Reserve policy, inflation, the employment market, economic growth, and the 10-year Treasury yield. Your individual credit score, down payment, debts, and other financial factors also play a role.

Mortgage rates often drop when inflation falls, home-buying demand slows, the economy cools, or 10-year Treasury yields decline.

The 3% mortgage rates seen during the peak of the COVID-19 pandemic were a result of extreme actions taken by the Federal Reserve, which lowered the federal funds rate to near zero to stimulate economic activity. Unless another economic crisis of this magnitude occurs, super-low rates like these are unlikely to be seen in the future.

Laura Grace Tarpley edited this article.

If 2026 is the year you plan to buy a house, now’s the time to start preparing. The market’s still finding its balance after a few chaotic years, but signs point to calmer waters — at least for home buyers who plan ahead. With mortgage rates expected to cool and more homes hitting the market, you can use the top of the year to get your finances in order, boost your credit score, and step into the new year ready to compete.

MORE: See our top picks for mortgage lenders for first-time home buyers.

After two years of volatility with mortgage rates and home prices, the 2026 housing market could feel almost calm — by comparison, anyway. Inflation has eased slightly to 2.7% year-over-year, down significantly from its 2022 peak but still above the Federal Reserve’s 2% target.

The Fed recently cut rates at its December meeting and indicated it could make at least one additional rate cut in 2026, potentially offering buyers some long-awaited relief on borrowing costs.

“While that should improve affordability somewhat, home prices and limited inventory will still keep competition strong,” Jose Pascual, head of mortgage and commercial banking at PSECU, said in an email interview. “Buyers who start preparing now and lock in a favorable rate when the time comes may find themselves in a much stronger position.”

This means buyers targeting a new set of keys should start preparing early, if possible, rather than waiting until they see a listing they love. If rates do dip, competition will heat up fast. The goal? Position yourself to act quickly when the right home and rate align.

Discover how inflation affects mortgage rates.

One of the biggest changes heading into 2026 has nothing to do with mortgage rates or home prices. It’s how lenders look at credit.

For years, a single number — usually a FICO score of around 620 — served as a hard line between who could and couldn’t qualify for a conventional mortgage, a home loan that isn’t backed by the federal government and instead follows rules set by Fannie Mae and Freddie Mac. That’s starting to change.

New underwriting standards supported by those agencies are moving away from rigid score minimums and toward a broader picture of a borrower’s financial behavior. Instead of focusing so heavily on one score, lenders can now look at your financial patterns, such as how consistently you pay your bills, how your debt balances change over time, and how responsibly you manage recurring expenses like rent or utilities.

Credit scores still matter, though. First of all, although Fannie Mae and Freddie Mac are removing the minimum credit score requirement, individual mortgage lenders can still impose a minimum credit score of 620 if they choose to do so. Credit scores also influence the interest rate and terms you’re offered. But they’re no longer the sole gatekeepers they once were.

That shift could be especially meaningful for first-time buyers and renters with limited or nontraditional credit histories. Someone who pays rent on time every month but doesn’t carry many traditional credit accounts may look stronger under this approach than they would have a few years ago.

For buyers hoping to purchase in early 2026, the takeaway is simple: Lenders will increasingly consider your full financial picture, not just a three-digit number.

Read more about the credit score rules that are changing for mortgages in 2026.

Before you even think about open houses, take a hard look at your finances. Eileen Tu, vice president of product development at Rocket Mortgage, said one of the smartest things aspiring buyers can do before 2026 is get organized.

“For anyone planning to buy their first home in 2026, they should consider participating in a home-buyer education course before the end of the year,” Tu said in an email interview. “It helps buyers understand the process and begin the new year feeling confident and informed before seeking pre-approval.”

These courses, many of which are approved by the U.S. Department of Housing and Urban Development (HUD), walk you through every step of the home-buying process — from assessing your financial readiness and budgeting for a mortgage to understanding credit, comparing mortgage loan options, and preparing for closing.

You’ll also learn how to compare mortgage lenders, estimate monthly payments, and plan for ongoing costs like maintenance and insurance. Think of these courses as a practical, low-pressure dress rehearsal for buying a home — and one that can make you a much savvier shopper when you’re ready to buy.

Finally, be realistic about your 2026 budget. “Future homebuyers should take a close look at their budget to understand what a comfortable monthly payment looks like,” Tu said. “Factor in major expenses on the horizon — like childcare, tuition, or a new car — to get a clear picture of your financial situation.”

How much house can you afford? Use our free home affordability calculator.

When you’re gearing up for a mortgage, it’s easy to focus on the down payment and forget everything else that impacts affordability, such as homeowners insurance, property taxes, and home maintenance. But it’s often the hidden costs that can derail a deal.

“The biggest challenges usually come from buyers not fully understanding what they can comfortably afford,” Michael Desimone, chief lending officer at Citadel Credit Union, said via email. “Beyond the down payment, costs like property taxes, insurance, and closing fees can quickly add up.”

Desimone recommends taking at least six months to prepare financially before applying for a mortgage. That means checking your full credit picture for free at AnnualCreditReport.com, paying down debt, and keeping credit card balances low. “A little preparation goes a long way toward avoiding surprises in underwriting,” he said.

Another under-the-radar tip? Start building a cushion for post-closing expenses, such as a new roof, water heater, or paint job. Even well-maintained homes can need quick fixes. Planning for those now means fewer financial shocks later.

If the idea of saving 20% for a down payment feels impossible, take a deep breath. It’s mostly a myth. From lender-specific programs to government-backed mortgages, it’s easier than ever to get into a house with way less than 20% down.

First, consider an FHA loan, which offers a pathway to homeownership with a down payment as low as 3.5%. If you qualify for a VA loan, you can put $0 down at closing. Additionally, many lenders offer their own low-down-payment programs, and state housing authorities often offer grants or low-cost loans to help ease the down payment burden.

The key takeaway? Don’t assume help isn’t available. Spend time researching options now so you can hit “apply” when your finances and the market align.

This map shows how long it takes Americans to save for a 20% vs. 5% down payment.

After years of waiting for rates to drop or prices to soften, some would-be buyers have developed a kind of financial stage fright. But experts agree: The “perfect” time to buy rarely shows up when you expect it.

“Timing the market is nearly impossible,” Tu said. “Interest rates will fluctuate, and waiting for the perfect moment often means missing opportunities. Instead of focusing on market timing, base your decision on your personal and financial readiness.”

If you find a home in 2026 that fits your budget and lifestyle, Tu said, don’t let speculation about future rates hold you back. Refinancing your mortgage later is always an option.

Ultimately, the smartest move is to treat your home purchase like any other long-term financial decision. Focus on what you can control (your credit, savings, and debt), and prepare for what you can’t.

Determine whether you’re ready to buy a house.

Most forecasts indicate modestly lower mortgage rates and slightly increased housing inventory in 2026. That combination could make it a more balanced market for buyers than we’ve seen in years. Still, whether 2026 is a good time for you to buy a home depends on your financial readiness. A solid down payment, strong credit, and steady income matter more than market headlines.

If inflation remains stable or rises, economists expect the Fed to cut interest rates again in 2026. While it takes some time for mortgage rates to follow, mortgage rates generally go down (albeit slightly) following a Fed interest rate cut. Keep an eye out for the Fed 2026 meeting dates in January, March, April, June, July, September, October, and December. Working with a trusted mortgage lender can also help you plan a rate lock strategy around these dates so you capture the best possible rate when you’re ready to buy. Your lender may also offer rate float-down programs that lower your locked rate if rates decline within a specified timeframe.

Here’s the good news: It’s highly likely. As of December 2025, 15-year conventional mortgage rates are already in the 5% range. Freddie Mac reports 15-year mortgage rates at 5.47% for the week of December 18, 2025. VA rates for the same loan term typically fall within the mid-to-upper 5% range. If you’re looking for a 30-year mortgage, you’re still in luck. Thirty-year fixed-rate mortgages from the VA are also in the 5% range. You also may be able to get a 5% mortgage rate if you live in a low-cost-of-living area, provide a large down payment, and shop for deals with mortgage lenders.

Laura Grace Tarpley edited this article.