Mortgage rates crossed 7% again — what it actually does to your monthly payment
A one-percentage-point rate move shifts a $400,000 mortgage payment by more than $250 a month. We run the real numbers across five loan sizes so you know exactly where you stand.
The 30-year fixed rate has climbed back above 7% according to the latest Freddie Mac Primary Mortgage Market Survey. That number gets a lot of headline attention, but what it actually means depends entirely on the loan size. Here is the math at five price points — so you can see the real dollar impact rather than a percentage abstraction.
What a 1-point rate move does to your payment
The relationship between rate and payment is not linear — it curves. A move from 3% to 4% hurts less than a move from 6% to 7% on the same loan balance. Here is the principal-and-interest payment at 6%, 6.5%, 7% and 7.5% across five common loan sizes on a 30-year term:
| Loan amount | @ 6.0% | @ 6.5% | @ 7.0% | @ 7.5% |
|---|---|---|---|---|
| $200,000 | $1,199 | $1,264 | $1,331 | $1,398 |
| $300,000 | $1,799 | $1,896 | $1,996 | $2,098 |
| $400,000 | $2,398 | $2,528 | $2,661 | $2,797 |
| $500,000 | $2,998 | $3,160 | $3,327 | $3,496 |
| $600,000 | $3,597 | $3,792 | $3,992 | $4,195 |
Principal and interest only. Does not include property tax, insurance, HOA or PMI.
On a $400,000 loan, the jump from 6% to 7% adds $263 per month — $3,156 a year. Over the full 30-year term, that is $94,680 in extra interest assuming you never refinance. The move from 6% to 7.5% adds $399 per month and $143,640 over the life of the loan.
What it means for how much house you can afford
Lenders qualify you based on your monthly payment, not the rate itself. The 28% front-end limit caps your total housing payment at 28% of gross monthly income. Here is what a household earning $8,000/month gross can afford at each rate, assuming 20% down, 1.1% property tax and 0.5% insurance:
6.0%
$467,000
Max purchase price
6.5%
$442,000
Max purchase price
7.0% current
$419,000
Max purchase price
7.5%
$397,000
Max purchase price
From 6% to 7%, the same income qualifies for roughly $48,000 less home. That gap is often the difference between two different price brackets in a given market.
The PMI trap at 7%
At higher rates, PMI becomes more costly relative to the benefit of buying sooner. PMI typically runs 0.3%–1.5% of the loan per year depending on your credit score and LTV. On a $350,000 loan at 80% LTV (20% down you don't have yet), PMI at 0.7% adds $204/month on top of the already-elevated payment. At 6%, that same loan was more affordable to begin with — the PMI sting was smaller relative to the base payment.
The calculus on whether to put down less than 20% changes meaningfully above 7%. At lower rates, accepting PMI to get into a home sooner often won the math. At 7%+, the combined burden of a high rate and PMI can push the front-end DTI past 28% even on homes that would have qualified comfortably two years ago.
What buyers are actually doing right now
Purchase applications have pulled back from their peaks but have not collapsed. Buyers who must move (job relocation, family changes, lease-end) continue to transact at current rates. Discretionary buyers — those who can wait — are sitting out in larger numbers, which is contributing to a modest rise in inventory in some markets.
The most common adaptation is buying points to reduce the rate 0.25%–0.5% below the par rate, and accepting a shorter loan term than originally planned (choosing a 20-year over a 30-year to reduce the total interest paid despite the higher monthly payment).
What to watch next
The Federal Reserve's next meeting and the subsequent CPI print are the two most likely catalysts for a meaningful rate shift in either direction. If core inflation continues to cool, the 10-year Treasury yield — which mortgage rates closely track — has room to fall, pulling rates down with it. If inflation re-accelerates, rates could push into the 7.5%–8% range that would meaningfully constrain buying power further.
The practical advice has not changed: use the calculator to know your actual ceiling at the current rate, shop at least three lenders (rates vary by 0.25%–0.5% on the same day for the same borrower), and price out what a half-point drop in rates would actually save you before deciding whether to wait.
Run your own numbers
The table above uses P&I only. Your real payment includes property tax, insurance, HOA and possibly PMI — all of which the calculator models precisely for your scenario.
Common questions
Does a 7% rate mean I can no longer afford a home?
Not necessarily — it means you qualify for less house than you would at 6%, or you need a larger down payment to keep the payment manageable. The affordability calculator on this site applies the 28/36 rule to your specific income and debts, so you get a real ceiling rather than a rule of thumb.
Should I wait for rates to drop before buying?
Timing the market is risky in both directions. Rates falling from 7% to 6% on a $400,000 loan saves about $265/month — but if prices rise 5% in that time, the home costs $20,000 more, which adds roughly $120/month back. Run both scenarios with the calculator before deciding to wait.
Is it worth buying points to get below 7%?
One discount point costs 1% of the loan and typically lowers the rate by 0.25%. On a $320,000 loan that is $3,200 for a $52/month saving — a 61-month break-even. If you plan to stay past year 5 and rates do not drop enough to make refinancing attractive first, points can pay off.
How does a 7% rate affect refinancing an existing loan?
If your current rate is already above 7%, refinancing right now makes little sense — you would be trading one high rate for another plus paying closing costs. If your rate is below 5%, a refinance is likely out too. The window where refinancing makes mathematical sense narrows considerably above 7%.
How much bigger does the down payment need to be to offset a 7% rate?
Putting down 25% instead of 20% on a $400,000 home reduces the loan by $20,000, saving about $36/month in principal and interest. That is meaningful but not the same as a half-point rate cut. The bigger lever is price negotiation — a $20,000 price reduction at 7% saves roughly the same amount as going from 7% to 6.75% on the original price.