You’re making good money – maybe around $150,000 a year – and you’re ready to buy a house. But every time you look at mortgage payments, the numbers just don’t add up. You’re probably wondering the same thing thousands of other buyers are asking: “When will rates come down enough to make buying affordable?”

The answer might surprise you. And it’s not what most people want to hear.

The Math That Changes Everything

Let’s get straight to the numbers. When you make $150,000 a year, that breaks down to about $12,500 per month before taxes. Using the tried-and-true 28% rule, you should spend no more than $3,500 monthly on housing costs.

But here’s where it gets tricky. That $3,500 has to cover everything – your mortgage payment, property taxes, homeowners’ insurance, and possibly PMI if you put down less than 20%. After setting aside about $700 for taxes and insurance, you’re left with roughly $2,800 for just the principal and interest payment.

Now, let’s say you found a house for $675,000 (which is typical in many markets today). You’ve saved up 5% for a down payment, so you need to finance $641,250.

With current rates hovering around 6.5% to 7%, according to recent Freddie Mac data, your monthly payment would be way over that $2,800 target. To make that payment work, rates would drop to around 3.25%.

The Uncomfortable Truth About Low Rates

Here’s the reality check: rates at 3.25% are extremely rare. Looking back over five decades of mortgage history, rates only went that low during the COVID pandemic period. Before that health crisis, we hadn’t seen rates below 3.5% since the early days of mortgage tracking.

Current forecasts show the 30-year fixed rate staying between 6.5% and 7%, according to economists’ projections. Some experts are more optimistic, with predictions of rates reaching closer to 6% by the end of 2025, but that’s still nearly double what you’d need to afford that $675,000 house comfortably.

What If Rates Stay High?

Let’s flip the equation. If mortgage rates stay stubbornly high at current levels, what would have to happen to home prices for that same payment to work?

Using our $2,800 monthly budget for principal and interest, you could afford a loan of about $440,000. With 5% down, that means a purchase price of around $463,000.

That’s a $212,000 gap between what you want to buy and what you can actually afford. That’s not a small difference – it’s nearly a third of the home’s value.

Understanding the 28% Rule in Today’s Market

The 28% rule suggests that your monthly mortgage payment shouldn’t exceed 28% of your gross monthly income, but many buyers today are finding this rule harder to follow than ever before.

This guideline has been a cornerstone of lending for decades because it helps ensure you can handle your mortgage payments even if other expenses come up. But with home prices rising faster than incomes in many areas, some buyers are pushing beyond this limit.

The problem is that stretching beyond 28% leaves you vulnerable. If you lose your job, have medical expenses, or face other financial emergencies, a payment that eats up 35% or 40% of your income becomes much harder to manage.

Smart Alternatives When the Numbers Don’t Work

Just because the perfect scenario isn’t available doesn’t mean homeownership is impossible. There are several strategies working buyers are using right now:

Take Advantage of Seller Concessions

The current market favors buyers in many areas. Sellers are offering concessions – sometimes up to 3% of the purchase price – to help with closing costs or buy-downs. This extra money can significantly reduce your upfront costs or temporarily lower your interest rate.

Consider a 2-1 Buy-Down

A 2-1 buy-down uses seller concessions or your own cash to reduce your interest rate temporarily. In the first year, your rate might be 2% lower than the actual rate. In the second year, it’s 1% lower. Then it adjusts to the full rate in year three.

This strategy works well if you expect your income to grow or if you believe rates will drop enough in a couple of years to make refinancing worthwhile.

Look at House Hacking

If you’re single or don’t mind roommates, consider buying a property where you can rent out bedrooms. A three-bedroom house where you rent two rooms can significantly offset your mortgage payment. This strategy is especially effective in areas near colleges, job centers, or public transportation.

Consider Adjustable Rate Mortgages

FHA and VA loans offer adjustable-rate mortgages that start with lower payments. If you’re confident in your ability to refinance or pay off the loan before rates adjust significantly, this might work for your situation.

Co-Buying Options

Don’t overlook co-buying with family members. Whether it’s a sibling who’s also looking to buy or a parent who’s ready to downsize, sharing a mortgage payment can make homeownership possible for both parties.

Buy Below Your Means

This might sting, but consider starting with a smaller home or a different neighborhood. Your first home doesn’t have to be your forever home. Building equity in a more affordable property can set you up to move up later when your financial situation improves.

Making Your Decision

The housing market rarely gives us perfect timing. Waiting for rates to drop to 3.25% could mean waiting for years – or it might never happen again. Similarly, waiting for home prices to drop $200,000+ in most markets is probably unrealistic.

Recent data shows mortgage applications reaching the highest year-over-year growth in more than four years, suggesting that even small rate improvements bring buyers back to the market. Learning about how high interest rates impact housing markets helps explain these buyer behavior patterns. Economists expect rates to close 2025 around 6.3%, providing some relief but still not enough to make that dream house affordable using traditional guidelines.

If you believe in homeownership as a long-term wealth-building strategy, focus on making it work now rather than waiting for perfect conditions. Be realistic about what you can afford, creative about deal structure, and honest about your priorities.

The math is clear: we’d need mortgage rates at pandemic-era lows to make that $675,000 house work on a $150,000 salary. Instead of banking on that unlikely scenario, use the opportunities available today – seller concessions, creative financing, and alternative approaches to homeownership.

Your journey might not look exactly like you planned, but with the right strategy, you can still achieve homeownership and start building equity for your future. The best time to buy is when you’re financially ready and have found a property that fits your budget – not when market conditions are theoretically perfect.