5 Ways to Buy a New Home with a Higher Mortgage Rate
Higher rates don’t have to stop your home search.
Mortgage rates have gone up. The average rate for a new 30-year fixed-rate mortgage at the end of July 2025 is between 6.72 and 6.86 percent. With that in mind, buyers must be savvy.
Why it matters: Higher rates don’t have to derail your dream of buying a home. There are ways to buy even though rates are higher.
What’s ahead: Five strategies to consider when mortgage rates are high.
1. Stretch Your Budget, Carefully
If your income allows, take on a larger monthly payment to afford the home you want.
Review your spending and savings goals to determine what you can afford.
New homes often include energy-efficient systems and warranties that can reduce ongoing costs.
2. Use More Cash Up Front
Paying more now can mean saving more later:
Increase your down payment.
Pay for upgrades out of pocket.
Buy down your interest rate with discount points.
Discount points are an upfront fee you choose to lower your rate and payment. Work with your lender to see what’s worth the cost.
3. Consider a Hybrid Loan
A hybrid loan may give you the edge in getting into your new home.
A 7/1 ARM or similar loan can offer a lower initial rate for several years and then rate is adjusted for the remainder of the loan.
Good if you plan to sell or refinance before the rate resets. Risky if you don’t.
4. Adjust Your Wish List
Focus on needs over wants:
Choose a more affordable community.
Skip upgrades.
Opt for unfinished space.
Start with the essentials, upgrade later.
5. Don’t Wait Too Long
Interest rates fluctuate. Waiting can mean missing out on:
Building equity
Tax benefits
Protection from rising rent
If you're ready now, buying sooner may serve you better. The lost opportunity outweighs the benefits of homeownership.
Why it matters: You have more control than you think. Smart strategies can help you buy despite higher rates.
Julie Gordey
A lifelong educator, Julie Gordey, is a retired school administrator. After years of focusing on education, this University of Texas graduate now travels and enjoys freelance writing for BDX and NewHomeSource.com.