Buying Power
The home price your income, debts, down payment, and current rate let you afford. It moves with mortgage rates, so the same income buys less when rates rise.
Buying power is the practical answer to how much house your finances support right now. It is shaped by your income, your existing debts, the size of your down payment, and the prevailing mortgage rate. Because the rate is part of the equation, the figure is not fixed, the same income buys a different price as rates move.
Rate sensitivity is the part buyers underestimate. A one-point move in rates changes the monthly payment your income can carry, and with it the price you can afford, so the same budget supports a different home at each rate. Run your income through two different rates to see the size of your own swing. Paying down debt or increasing your down payment moves the number too. Rates change frequently, so it is worth refreshing any affordability estimate with current figures before you shop seriously. Exact effects vary by loan type, term, and lender.
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Related terms: Mortgage Rate Sensitivity , Debt-to-Income Ratio (DTI) , Down Payment
Last updated . Part of the FinExplained finance glossary .