“When are rates going to drop?”

I get asked this at least five times a day. And look, I totally get why you’re asking. You’re waiting for rates to hit 3% or 4% so you can finally pull the trigger on that house you’ve been watching.

But we need to talk. Because rates are sitting around 6% right now, and honestly? They’re not really moving much.

Let Me Show You Some Math That Changed My Mind About Waiting

Okay, so you make $150,000 a year. Not bad. That’s $12,500 a month.

Using the 28% rule – which is basically the amount lenders say you should spend on housing – you’ve got $3,500 a month to work with for your total payment.

Now take out about $700 for taxes and insurance. You’re left with $2,800 for your actual mortgage payment.

So here’s where it gets nuts. You find that perfect $675,000 house. You put 5% down like most people do.

What rate would you need to make that payment fit into your budget?

3.25%

I’m not kidding. You’d need a rate of 3.25% to make the numbers work on that house.

Yeah, But When Did Rates Last Hit 3%?

One time in 50 years. COVID.

I’ve looked at mortgage rate data going back five decades, through seven different recessions. It took a global pandemic and the government basically shutting everything down for rates to drop that low. They hit 2.65% in January 2021.

That wasn’t normal. That was the Fed freaking out and buying up mortgage-backed securities like crazy to keep the economy from collapsing.

We’re not in a pandemic anymore. The economy’s not collapsing. So are we going back to 3% rates anytime soon?

Probably not.

Here’s What Happens If Rates Stay Where They Are

Let’s flip this around. Same scenario – you make $150K, you want that $3,500 payment.

But rates stay at 6%.

Now your loan amount drops to $440,000. Which means you’re looking at a house that costs around $463,000.

That’s $212,000 less than the house you actually want.

Two hundred and twelve thousand dollars.

That’s a whole different house. Different neighborhood. Different school district. Different everything.

So What Do You Actually Do?

I’m not going to lie to you and say the market’s great right now. It’s not. Rates are between 6% and 6.3% depending on the day and your credit score.

But waiting around for rates to magically fall to 3%? You might be waiting forever.

There are moves you can make right now. You just have to think differently.

Grab those seller concessions. Sellers are nervous. Inventory’s up. I’ve seen buyers get 3% in closing costs from sellers who are desperate to move. Take that money and buy down your rate with a 2-1 buydown. First year your rate’s 2% lower. Second year it’s 1% lower. By year three, either you’ve gotten raises or rates actually dropped and you can refinance.

Look at ARMs. I know, I know. Adjustable rates sound scary. But hear me out. 5/1 ARMs are going for about 5.55% right now. That’s cheaper than fixed rates. If you’re planning to sell in 5-7 years anyway – and most people do – why are you paying extra for a 30-year rate you’ll never use?

Rent out rooms. House hacking isn’t sexy, but it works. Single? Rent out a bedroom. Got a sibling who also wants to buy? Go in together. Parents downsizing? Combine households. It’s not the dream, but it gets you in.

Buy a smaller house. Nobody wants to hear this one. Instead of that $675,000 house, you buy the $463,000 house. It’s not forever. You build equity. Rates drop in a few years? You sell and move up. But you’re not throwing away rent money waiting for perfect conditions that might never come.

What’s Actually Going To Happen With Rates

People way smarter than me are saying rates will probably hang out around 6.1% to 6.3% for a while. By early 2026 they will drift down to 6.2%.

The Fed’s got another meeting in December. They might cut rates again. But here’s the thing – the Fed doesn’t directly control mortgage rates. They’re connected, but not directly. So even if the Fed cuts, mortgage rates might not drop much.

Inflation’s still running higher than the Fed wants. Until that comes down closer to 2%, rates aren’t going to fall dramatically.

Can We Talk About History For A Second?

In the 1990s, 7% mortgage rates were just normal. Like, nobody thought twice about it.

Go back to 1981? Rates hit 18%. Eighteen percent.

The 2-3% rates we had during COVID were weird. They were an outlier. The government basically broke the economy’s rules to prevent a depression.

We’re back to normal now. And in normal times? 6-7% rates are actually pretty standard.

You’ve Got Three Options

• Wait for 3% rates (might not happen in your lifetime)

• Wait for prices to crash $200,000 (also might not happen)

• Figure out how to make it work with what’s available today

That’s it. Those are your choices.

Owning a home beats renting. You’re building equity instead of building your landlord’s equity. But if you agree with that, then you need to stop waiting for perfect and start working with what you’ve got.

Use concessions. Get creative with loan types. House hack if you need to. Buy below your means and upgrade later.

Because five years from now, you’re either going to have a house and some equity, or you’re going to be still renting and wishing you’d done something back in 2025.

The perfect moment isn’t coming. But real opportunities are happening right now if you’re willing to adjust your strategy.

Want the full breakdown with all the calculations? I walk through this exact scenario on my YouTube channel – showing you the real numbers on what rates would need to be versus what they actually are.