Mortgage Rates Are High. Does It Still Make Sense to Buy a Home?

Mortgage Rates Are High. Does It Still Make Sense to Buy a Home?

Higher mortgage rates have slowed the housing market—but they're also creating opportunities for buyers to negotiate seller concessions, rate buydowns, repairs and closing costs. And down-payment assistance may make buying more attainable than you think.

Let's address the elephant in the room: mortgage rates are high.

As of September 29, Mortgage News Daily's top-tier 30-year fixed mortgage rate reached 7.58%—the highest level since November 2023.

I'm not going to tell you that doesn't matter. It does. A higher interest rate has a real impact on your monthly payment and how much home you can comfortably afford.

But if you were sitting across the table from me asking, "Kristine, should I even consider buying a home right now?" I also wouldn't tell you to put your plans on hold based on the interest rate alone.

I'd want to look at the whole picture.

What can you comfortably afford each month? How much cash do you actually need to buy? Do you qualify for down-payment assistance? Can we negotiate a seller credit or a temporary interest-rate buydown? Is there room to negotiate the price or repairs? And most importantly, how long do you plan to own the home?

Because today's higher rates are creating something buyers haven't had much of in recent years: negotiating power.

High rates have slowed buyers down—and that's creating opportunity

Buyer demand is low right now, and affordability is a major reason why.

Here in San Diego, homes are taking longer to sell. Homes and condos priced below $750,000 are taking an average of 126 days to go under contract, compared with 99 days at this time last year. From $750,000 to $1 million, it's 94 days compared with 79 days last year.

That doesn't mean homes aren't selling. In August, 52% of San Diego homes still sold at or above their last asking price.

It means we have a more nuanced market—and that's where having a strategy matters.

I'm seeing some of the greatest opportunities with condos. In some areas, a significant percentage of condo listings simply aren't selling and are eventually being pulled from the market. When a seller has been sitting on the market without an offer, that's when we may have an opportunity to negotiate.

And sellers are negotiating. According to Redfin, 57% of San Diego home sales included a seller concession in August.

A seller concession could mean money toward your closing costs. It could help pay for a temporary interest-rate buydown. We may negotiate repairs or credits after the home inspection. Depending on the property, we may also have room to negotiate the purchase price.

Those things can add up.

What exactly is a 2-1 buydown?

One strategy I'm using with buyers right now is asking the seller to help fund a 2-1 interest-rate buydown.

If you've never heard of one, here's how it works: the seller contributes money at closing that is used to temporarily reduce your effective mortgage rate for the first two years.

Your rate is effectively reduced by two percentage points during year one and one percentage point during year two. In year three, your payment is based on the full interest rate you locked when you purchased the home.

I understand this strategy personally because I've used it myself.

When my husband and I purchased our second condo in December 2025, we locked in a 7.8% interest rate. Our new mortgage payment was going to be more than double what we had been accustomed to paying.

That was a big adjustment to our household budget—and, understandably, made my husband pretty nervous!

Rather than walk away from a home we wanted and could afford, we negotiated $16,000 from the seller to fund a 2-1 buydown.

Here's approximately what that looked like for us:

Year 1: 5.8% effective rateWe saved roughly $950 per month.

Year 2: 6.8% effective rateWe saved roughly $425 per month.

Year 3: 7.8% note rateWithout a refinance, our payment would have increased to the full amount based on the interest rate we originally locked.

That gave us something incredibly valuable: runway.

Instead of more than doubling our housing payment overnight, we had time to gradually adjust our household budget. We also knew our salaries would likely increase somewhat over those two years.

But this part is important: before we purchased the condo, we made sure we would be comfortable with the payment at the full 7.8% rate.

We did not buy the property assuming rates would fall or that we'd be able to refinance.

As it happened, an opportunity to refinance did come along. We locked in a 6.8% rate before our payment ever increased to the amount it would have been at 7.8%.

That's how I like to think about a temporary buydown. I don't want a buyer relying on a future refinance to make a home affordable. I want the home to be affordable at the full payment from day one.

The buydown simply gives you some breathing room while you adjust to the new expense.

And sometimes we can get the seller to pay for that breathing room.

Interestingly, when we purchased our first condo years earlier, our mortgage rate was around 3.5%—and we still chose to spend our own money to buy the rate down further because we knew it was a long term investment and the numbers made sense.

Financing has always been part of my real estate strategy. In today's higher-rate environment, I think it's even more important to understand all the tools available to you rather than simply looking at the advertised mortgage rate and deciding you can't buy.

You probably don't need a 20% down payment

This may be the biggest misconception I hear from first-time homebuyers:

You do not need 20% down to buy a home.

I can't tell you how many people I talk to who assume they need to save $100,000 or $150,000 before they can even think about buying in San Diego.

For many buyers, that simply isn't true.

Many of my buyers use loans requiring only 3.5% to 5% down. And I can speak from personal experience here, too.

I bought my first property with 3.5% down using an FHA mortgage. I bought my second with 5% down and my third with 10% down.

I've never put 20% down on a home.

There can absolutely be advantages to making a larger down payment, and the right amount depends on your finances, loan program, monthly-payment goals and the property you're buying.

But I don't want someone spending years on the sidelines trying to reach an arbitrary 20% number because they think that's a requirement.

And this is where down-payment assistance can completely change the conversation.

Down-payment assistance isn't just for low-income buyers

Depending on the state, county or city program and your eligibility, down-payment assistance programs may provide assistance ranging from approximately 3% all the way up to 20% of the purchase price. Some programs can also help with closing costs.

I've helped my buyers secure nearly half a million dollars in down-payment assistance over the past four years, and many of my first-time buyers have ultimately purchased their homes with less than $10,000 of their own money.

Another misconception? That you have to have a low income to qualify.

In San Diego County, California's current CalHFA income limit for many of its first-time homebuyer mortgage and assistance programs is $259,000. That means even a household earning nearly $260,000 a year may potentially qualify for state down-payment assistance, depending on the particular program and the buyer's qualifications.

And remember what's happening in today's market: sellers are negotiating, too.

So depending on the buyer, property and loan program, we may be able to use down-payment assistance for some or all of the down payment and closing costs while also negotiating a contribution from the seller toward allowable closing costs or an interest-rate buydown.

That's why I don't want you to decide on your own:

"I don't have enough saved."

"I make too much money for assistance."

"I need 20% down."

"I'll start looking in a few years when I've saved more."

Let's find out first.

You may still decide waiting is the right financial decision for you. But don't spend years waiting to reach a savings number you may never have needed in the first place.

Is the housing market about to crash?

This is another question I hear, especially when buyers see homes sitting on the market longer.

The current data doesn't point to the conditions normally associated with a housing crash.

Housing analyst Steven Thomas of Reports on Housing recently put it simply: "No imminent housing crash is lurking around the corner."

For a significant housing downturn, we'd generally expect to see a combination of very weak demand, an oversupply of homes and significant seller distress.

Right now, we certainly have weak demand. But inventory and distressed selling don't resemble the conditions associated with the last housing crash.

And this isn't just a San Diego story.

Across the country, existing-home sales declined 2% in August, while the number of homes available for sale increased from a year earlier. Yet the national median existing-home price was still 1.6% higher than a year ago, marking the 38th consecutive month of year-over-year price increases.

Another national measure from the Federal Housing Finance Agency showed U.S. home prices 2.6% higher in July than one year earlier.

Here in San Diego, the latest S&P Cotality Case-Shiller Index showed prices 1.63% higher year over year in July, the fastest annual increase in nearly a year and a half.

So no, homes aren't suddenly "cheap." And I don't think that's the opportunity buyers should be looking for.

The opportunity right now is leverage.

Should you wait for mortgage rates to come down?

Nobody can tell you with certainty where mortgage rates will be six months or a year from now. I certainly won't pretend that I can.

But there is another side of the equation that buyers sometimes overlook.

If rates eventually become more attractive, some of the buyers currently sitting on the sidelines may come back into the market.

More buyers can mean more competition for the same homes—and potentially fewer sellers willing to pay closing costs, fund a rate buydown, make repairs or negotiate on price.

So a lower interest rate doesn't automatically mean you'll encounter a better overall buying opportunity.

Personally, I've always liked buying real estate in the fall and around the holidays. There tend to be fewer buyers looking, and less competition can create opportunities to negotiate that may not exist during a busy spring market.

Would I buy a home today that I knew I needed to sell again in a year or two? Probably not.

But if you asked for my perspective as someone who has bought real estate myself and helped hundreds of buyers navigate this decision, I'd tell you that I look at homeownership on a 5-10 year horizon, not based on what I think will happen to prices or mortgage rates next year.

I genuinely believe that many people who buy a home they can comfortably afford today and hold it for the next five to ten years will ultimately be happy they did.

That doesn't mean the first year or two will necessarily be exciting from an investment standpoint.

Rates may remain elevated. We may not see the enormous price gains homeowners experienced during the pandemic years. Home values can fluctuate, and there are never guarantees about future appreciation.

But a home is also different from many other investments because you need somewhere to live.

You're purchasing housing for yourself while also building ownership over time.

For me, that's why the decision isn't simply, "Will this house be worth more next year?"

It's: "Does this home work for my life and my budget, and am I comfortable owning it for the long term?"

If the answer is yes, that's when I think it's worth seriously exploring the opportunity in front of you.

Don't rule yourself out before you know your options

My job isn't to convince you to buy a house.

My job is to help you understand your options, look at the numbers and tell you when I see an opportunity that makes sense.

Sometimes I'll tell a buyer they're ready. Sometimes I'll tell them there are a few things we should work on first.

But what I don't want you to do is assume you can't buy because mortgage rates are high, you don't have 20% to put down, you think you make too much money for assistance, or you've read enough scary housing headlines to convince yourself you should wait.

Let's actually find out.

We can look at what you could comfortably afford, explore down-payment assistance programs, talk with a trusted lender about financing options and then see what opportunities exist in the market.

You may decide now isn't your time.

Or you may discover that buying a home is much closer than you thought.

Sources: Mortgage News Daily; Redfin; Reports on Housing; California Housing Finance Agency (CalHFA); National Association of Realtors; Federal Housing Finance Agency; S&P Cotality Case-Shiller Home Price Index.