If you’ve looked at houses lately and thought, “How are people affording this?” you’re not alone. A few years ago, good credit and a steady paycheck could land you a mortgage around 2.5 to 3%. Today, that same borrower is looking at something closer to 7%. The house didn’t change. Your income may not have changed. But the monthly payment absolutely did.
That jump is a big reason so many people feel priced out of the housing market right now. And no, it’s not just a feeling. The math makes it painfully clear.
Banks love talking about interest rates and percentages. That’s fine. But percentages don’t pay the bills. Money talks, and we’re here to break it down in language we all understand. So instead of getting stuck in rate charts and market jargon, let’s talk about what these interest rate changes actually mean to your money each month.
Let’s use an average home price to keep things simple. Say you’re buying a $350,000 home with a 30-year fixed mortgage. No tricks. No fine print. Just principal and interest.
A few years ago, if you’d put nothing down*, at about 3% your payment would be somewhere around $1476 every month. Not pocket change, but manageable for many families.
Try to buy that same $350k house today. Mortgage rates are close to 7%, and that same 30-year loan jumps to roughly $2329 every month.
That’s $853 MORE out of your wallet every single month. Just because interest rates went up.
The house didn’t get bigger. The neighborhood didn’t get better. You still have to replace the dishwasher when it goes out. Only now, you’re paying much more for the same house.
Let’s put it in everyday terms. What would you do if you had an extra $853 per month?
You could pay for:
This is why so many people are saying, “We can afford the house, just not the payment.” It’s not that buyers forgot how to budget. It’s that the interest went crazy.
Over time, that cost adds up. At the lower rate, you’d pay roughly $181,000 in interest over the life of the loan. At today’s rates, that number jumps to close to $489,000. That’s more than a $300,000 difference. Not for a bigger home. Just in interest for the loan.
What would you do with $300k in your pocket?
For a lot of buyers, this interest rate shift changed everything. Higher payments mean you can afford less house, even with good credit. First time buyers are waiting longer or deciding to rent because it feels safer. Homeowners with low rates are staying put because giving them up feels impossible.
If it feels like the system moved the goalposts, that’s because it did. This isn’t about being irresponsible or “not ready.” It’s about the cost of borrowing changing faster than paychecks did.
Here’s the good news. Even today, a few things still matter more than people realize. Your credit score still plays a big role. Even a small bump can mean a better rate and more money in your pocket. Shopping where you borrow matters too. Rates aren’t the same everywhere, and overpaying adds up fast when interest is already high.
A larger down payment can help, but it’s not the only lever. And talking to a real person early in the process can save you from surprises later.
None of this magically brings rates back to 3%. But it can keep you from paying more than you have to.
Even when rates are high across the board, where you borrow still matters. OnPath works hard to keep mortgage and refinance rates competitive, even in tough markets. More importantly, we take the time to explain what the numbers mean for your monthly budget, not just your paperwork.
If you’re thinking about buying, refinancing, or just trying to figure out your next move, our mortgage team is here to talk it through. No pressure. Just real answers.
If homeownership feels harder than it used to, you’re not imagining it. The math explains the frustration. Understanding how interest rates affect your wallet gives you clarity. And clarity puts you back in control, even when the market feels stacked.
* Note on Calculations: The figures mentioned in this post (such as the 0% down payment example) are for illustrative purposes only. Your actual down payment requirements, interest rates, escrow and monthly payments will vary based on your lender, credit score, and current market conditions.