Rates saw minor tick up this week, yet remain steady at levels not seen in over a year, much to buyers dismay.
The average rate on 30-year fixed home loans edged up to 6.66% for the week ending Aug. 27, marking a 1 basis-point increase from 6.65% the previous week, according to Freddie Mac.
Compared to the same week last year, when rates averaged 6.56%, borrowing costs have nudged slightly higher.
So what does this mean for homebuyers? Using the Realtor.com® mortgage calculator, we can look at how the math works out for the median-priced home in the U.S.
All examples assume a 30-year fixed mortgage and include principal and interest only, excluding property taxes, homeowners insurance, and mortgage insurance.
Monthly mortgage payment today with a 20% down payment
For a homebuyer purchasing a median-priced house in the U.S.—that figure currently stands at $430,000—with a 20% down payment (a $344,000 loan balance), the current monthly principal and interest payment stands at $2,211 with a 6.66% rate.
This represents a $23 monthly increase compared to the $2,188 payment required under last year's 6.56% average benchmark.
Monthly mortgage payment today with a 3.5% down payment
For buyers utilizing an FHA loan with a 3.5% down payment—requiring a loan amount of $414,950 on the same $430,000 home—the monthly principal and interest payment reaches $2,667 at the current 6.66% rate.
This translates to a modest $3 week-over-week increase from $2,664 and a $28 monthly increase over the $2,639 payment calculated from last year's 6.56% rate.
However, when compared against the October 2023 peak rate of 7.79%, which required a $2,984 monthly principal and interest payment for this loan size, current FHA buyers are securing a notable monthly savings of $317.
Long-term savings over 30 years
Over the 30-year lifetime of the loan, the total principal and interest cost for a borrower putting 20% down at today’s 6.66% rate amounts to $795,960.
While current rates represent a slight uptick year-over-year, buyers are still positioned far better than those shopping during the late 2023 high-water mark.
(Realtor.com) Financing $344,000 at the October 2023 peak rate of 7.79% resulted in a 30-year total payout of $890,640. Locking in at today’s rate yields a overall lifetime savings of $94,680 for conventional borrowers.
For FHA buyers financing with 3.5% down, the 30-year total principal and interest commitment at 6.66% totals $960,120. In comparison, taking out the same $414,950 loan at the 7.79% peak would have cost $1,074,240 over the life of the mortgage, generating $114,120 in lifetime interest savings for today’s lower-down-payment buyers.
While mortgage rates continue to hover within a tight range near mid-6% levels, the combination of substantial savings relative to peak rates and improving inventory conditions provides a more manageable entry point for active home buyers.