How interest rates affect homebuying

For everyday Americans, a relatively high national debt can lead to higher interest rates on financial products such as mortgages.

The rare, so-called 'assumable' mortgage is landing homebuyers a 3% rate.

The Federal Reserve's decisions can impact your money

Car loans, mortgages, business investments—these and more can be drastically impacted by the adjustment of the Federal Reserve’s federal funds rate. Alternatively, savers can earn higher, low-risk yields on their savings when the Fed’s target rate is higher.

Raising interest rates can help control inflation

While controlling a complex and dynamic economy is difficult, interest rates—more specifically, the rate at which banks lend each other money overnight—are a powerful tool. Generally, raising the rate makes purchases more expensive and cools an overheated economy.

Roughly 37% of first-time US home buyers have student debt

When those people have extra money, they might wonder: Is it better to pay down my mortgage or my student loans first? This article argues that the answer depends on each loan's interest rate, among other factors.

The pros and cons of long-term renting

Soaring mortgage rates and inflated home prices have led more consumers to opt to rent instead of buying, becoming “forever renters.” This article weighs the costs and benefits of renting instead of buying. Benefits include flexibility, less upkeep, and potentially lower expenses, while downsides include less stability and reliance on landlords. Read this article and decide whether homeownership or renting is the choice for you.

Interest rates have historically been an indicator of the US economy's overall health.

A ‘rent vs. buy’ financial calculator

The New York Times built a continuously updated financial calculator to help potential homebuyers figure out which makes more sense given their individual situation: buying or renting a home. It takes into account how long someone plans to own the home for, mortgage rates, and more.

Historically, borrowing money from other people to purchase property was common until private financing companies—primarily building and loan associations—stepped in to offer mortgages to buyers.

About 88% of all homebuyers feel their home is a good investment.

A guide to the homebuying process

From searching for the home itself to writing an offer letter to closing on the home, there are specific steps involved in becoming a homeowner. This checklist from a Tennessee real estate broker provides a visual outlining the basic steps of the process.

'Floating rate' loans periodically adjust their interest rates in accordance with economic conditions

When the Federal Reserve began raising interest rates in 2022 to combat inflation, interest payments borrowers owed to private credit lenders increased accordingly. Private credit funds benefited as loan returns increased, making the asset class attractive to investors at the time.

See the annual income required to purchase a typical three-bedroom home in each state as of 2025, based on a 10% down payment, a 6.65% interest rate on a 30-year fixed mortgage, and a 30% income-to-housing cost threshold.

Mortgages are loans used to buy property

A mortgage is a loan used to buy property, like a house. Borrowers typically put down a percentage of the cost of the home, and the amount left over is financed through a lender, like a bank.

Periodically, the Federal Open Market Committee decides whether to raise, hold, or lower the federal funds rate

The federal funds rate is the interest rate at which banks lend their excess funds through the Fed. This influences what banks are willing to pay consumers for their deposits in savings and CD accounts. Typically, the higher the federal funds rate, the higher the interest rates on CDs.

The salary needed to buy a home in the US

Anyone who has recently explored buying a home in the US knows it's not a cheap endeavor. The median salary for the typical American homebuyer has risen to roughly $104K, up from $88K two years ago. This data visualization breaks down the household income required to buy a median-priced home in 50 major US metro areas. Learn more here.

Subprime lending practices, which fueled the housing bubble, surged after 2000.

Mortgage insurance offers help to buyers who can’t afford to put down 20% up front

Buyers who need mortgage insurance end up paying more per month on top of their loan to cover the added insurance. At its core, mortgage insurance helps buyers purchase a home they can’t afford, letting them put down 20%, while protecting lenders offering potentially risky loans.

57% of future homebuyers plan to put down less than the recommended 20% on a house

Historically, experts have recommended buyers put down 20% on a house when buying. But due to rising housing costs and the cost of living, this goal is unattainable for many buyers.

US homeownership rates declined from the start of the Great Recession through 2016.

The Fed operates within the open market as a competitive bidder of interest rates

Because it’s viewed as a risk-free platform to earn interest, whatever rate it sets becomes the default benchmark. To maintain its target rate prescribed by the Federal Open Market Committee, the Fed has various tools it offers both commercial banks and home loan institutions.

Use this student loan calculator to estimate monthly student loan payments.

Housing prices have skyrocketed over the last 50 years

After adjusting for inflation, housing costs have more than doubled since 1965. And based on average incomes, buyers are spending more than five times their income for a home versus buyers in 1965, who typically spent less than three times their income.

Investing in bonds comes with a few risks

Think: changes in interest rates that impact the bond’s value, or a bond issuer completely defaulting on a loan. There are steps investors can take to lower their initial and future risk when investing in the bond market, such as checking a company's bond rating before investing.

Student debt has a widespread economic impact

Student debt is no different than the big rent or car payment that comes out of someone’s paycheck every month: Its presence affects that household’s purchasing power. Multiply that household by the 43 million Americans who had outstanding federal loan debt in September 2023, and student debt’s impact becomes considerable.

Surprising costs associated with homeownership include taxes and roof maintenance

Owning a home includes not just expected costs such as a mortgage, homeowners insurance, and landscaping, but also less-obvious expenses like property taxes, repairing and maintaining one’s roof and HVAC system, and HOA fees.

The Federal Reserve can set interest rates below zero

Interest rates, the cost of borrowing money, are the primary tool the Federal Reserve uses to control inflation. During periods of deflation, setting interest rates below zero penalizes saving, encourages banks to lend more and moves more cash through the economy.

Some argue that the rising US national debt has become more important in recent months.

Getting prequalified or preapproved for a loan is typically step one in securing a home loan

While prequalification and preapprovals give buyers an idea of the type of loan offer they might expect, the prequalification process is much more straightforward than getting preapproved. However, some real estate agents require buyers to get preapproved, and some sellers may take a buyer's offer more seriously.

See how 30-year fixed mortgage rates have changed over time—from a 1980s peak of roughly 18%, to hovering around 3% during the COVID-19 pandemic.

In 2024, 74% of homebuyers took out a mortgage

Debt owed on mortgages made up about 70% of US consumer debt as of 2025. Mortgage collateral ensures the lender isn’t at a complete loss if the borrower defaults. Under most mortgage contracts, the property is considered collateral under the loan. This means that if a borrower doesn’t repay the loan, then the lender can seize their property.

Renting versus owning a home, charted by age

One-third of American households are rented. The other two-thirds are owned or in the process of becoming owned, according to 2022 data from the American Community Survey. While most people rent in their younger years, homeownership rates tend to fluctuate based on age. To see home ownership and renter rates charted by age, check out these charts.

To continue selling mortgages, agencies that determine how risky a loan is gave high ratings to homebuyers regardless of their actual risk portfolio.

The average monthly mortgage payment in the US costs 38% more than monthly rent

A recent study showed that the price gap between renting and buying grew in 38 major US metro areas since last year. The metro areas with the smallest price gaps between renting and buying include Detroit, Philadelphia, and Cleveland.

Bond yields are the returns investors earn from a bond's interest—and they're a key economic barometer.

In real estate, a larger down payment can reduce your loan amount

However, the trade-off is liquidity: Tying up too much cash in a home can reduce emergency savings and delay your purchase.

Refinancing a mortgage is when a homeowner exchanges their current loan for a new one

Homeowners typically refinance to secure a lower interest rate and potentially a new loan term length. Debt owed on mortgages made up about 70% of US consumer debt as of 2025.

The market share of institutional investors in the US housing market is less than 1%

Institutional investors have drawn negative media attention for their purported role in limiting housing supply and driving housing unaffordability. This report separates myth from fact in the nuanced discussion around institutional investors' role in the US housing market.

Securitization has become common practice in home financing

When a homebuyer finances with a lender, they aren’t necessarily the one footing the bill. After a buyer secures a home loan, the lender can sell the loan to another financial institution or a private institution. That group can later sell that mortgage to investors. This is called securitization.

Owning a home can help build wealth via tax benefits and more

In addition to tax benefits and the potential to build equity in your home, houses are also typically considered an appreciating asset. That means their value is likely to increase over time.

The Federal Reserve Bank of Atlanta provides a monthly measure of home ownership affordability

Specifically, the Home Ownership Affordability Monitor shows a monthly measure of the median-income household's capacity to afford the median-priced home at the national level, the metro level, and more.

What are Treasury yields?

Treasury yields are the interest rates that the US government pays to borrow money for different lengths of time. Specifically, Treasury yields are interest rates on US government debt. They reflect economic outlooks and inflation expectations. Learn more about Treasury yields here.

For much of human history, homeownership was primarily associated with the elite

Before the Industrial Revolution, early mortgages were rather exclusive loans given only to nobility. But as more people gained more wealth through the Industrial Revolution, banks began to take on “higher-risk” loans to everyday people.

Find out ways to get lower rates on private loans, such as applying with a cosigner.

Despite record-high housing costs, Gen Z homeownership is surging

Many Gen Z homeowners have compromised on location and tightened their expenses to make buying a home possible. In 2025, 4% of homebuyers were Gen Z, up from 3% the year before.

What’s the outlook for CD rates in 2025?

The federal funds rate can have a big impact on CD interest rates. That means it also affects the amount of money any given CD can earn you. To learn more about how CD rates will look in 2025, and how recent rate cuts correlate to that, read this article.

Inflation is a monetary phenomenon in which consumers see a broad rise in the prices of goods and services across the economy over time

Sustained periods of inflation are often caused by central bank policies including low interest rates or increased money supply. With more money chasing the same number of goods and services, prices tend to rise and the value of a single dollar drops.

The factors stirring up a home insurance storm

The cost of the average home insurance premium shot up 33% between 2020 and 2023 in the US, a trend mimicking heightened inflation. But beyond the cost, insurers are also pulling out of major markets like Florida and California, and millions of policies aren't being renewed as the number of $1B weather disasters continues to increase each year. Read up on the difficulties the home insurance market faces here.

Consequences of a bad credit score

A bad credit score can lead to spending roughly $100K more on a typical mortgage. Poor scores also prevent you from getting certain jobs, apartments, and more, hindering you from building wealth in the long term.

Use this mortgage calculator to estimate how much you can borrow, factoring in fundamentals such as financial standing, property cost, loan length, and more.