BLAKE BAKKILA October 22, 2025
he real estate market has good and bad news for potential homeowners. Let’s start with the latter: Mortgage rates are chilling in the mid-6% range, and Zillow predicted they’ll likely remain there until the end of the year. While we can’t look forward to a significant drop, residential real estate agent Lindsey Harn says that’s not such a bad thing.
“I’m always a big proponent of getting into the market when a lot of people are on the sidelines, and now through the end of the year is a great time,” she explains. “If rates go down significantly—let’s say to 5.75%—your chances of getting a house for the best price possible goes out the window because the competition really heats up and we’re back to bidding wars.”
Before making any big moves, Harn shares the six questions to ask yourself about financing your home. Below, hear from her and Gerson Seise of Gerson Seise Realty about preparing yourself (and your wallet) for such a massive purchase.
1. Are You in a Saving or Spending Mode?
Take your own budgeting temperature well in advance, and Harn advises choosing your “mode.” Whether you’re looking to splurge or save, you can use an online mortgage calculator for a solid guesstimate on what you can expect to pay given the current interest rates.
“That’s a really great way to test out where you’ll feel comfortable, and to start educating yourself on what the payments will be at different price points,” she says.
2. How Much Can You Put Down?
Your down payment is a key determinant of your overall budget, and you’ll need to review your savings and gifts or loans. In 2024, 49% of all home buyers used their savings to finance, and 25% of first-time buyers paid their down payment with a “gift or loan from a relative or friend,” according to the 2024 Profile of Home Buyers and Sellers from the National Association of Realtors.
“The down payment will affect the mortgage costs,” Harn adds. “Based on what my clients qualify for and how much they’re willing to put down, we establish a price range and keep house-hunting between that threshold.”
Seise adds all-cash buyers will have different discussions with their real estate professional. “For these buyers, it’s more flexible and depends on how much cash they want to allocate toward the purchase,” he says. “The beauty of real estate is that, over time, most buyers see their property’s equity rise—so while we stay disciplined on budget, I remind clients that they’re not just spending money; they’re investing it.”
Not to mention, it’s a little known fact that you don’t have to pay 20% upfront. NerdWallet debunked the myth, revealing that 62% of Americans thought a 20% down payment was required. Even more encouraging, the NAR report also shared that the median down payment among all buyers was 18% and just 9% for first-time home buyers.
3. How Much Is Your Household’s Debt-to-Income Ratio?
So much comes down to the lender, and your realtor can recommend trusted pros, Seise says. During this meeting, the lender will determine what’s known as your “debt-to-income ratio”—but you’ll need to do some extra math homework here.
“When you go to qualify for a loan, lenders are looking for your gross income after debt obligations, and they’re not factoring in tax payments, health insurance costs, utility bills, etc.,” Harn shares. “A lot of people have other living expenses like daycare or private school that the bank won’t count for your debt-to-income ratio, and they’ll get approved for way more than they’re actually comfortable paying.”
Harn gives an example of a couple making $12,000 per month and spending $2,000 on other expenses like credit card payments and student loans.
“That’s $10,000 of income to work with, and typically, a lender will give you up to 49% of that, meaning you could potentially take on a housing payment of up to $4,900,” she says. “I do that math right in my office and ask if that’s a workable monthly housing payment, not including utilities. Then, we adjust our ideal price range.”
4. How Do You Feel About Renovating?
A house that requires renovating could be a headache for one person, and a chance to get creative for another. Depending on your budget and interest in renovations, you’ll need to apply that to your home spending range. Ask yourself if the house needs to be close to perfect, or if you’re willing to take on a bigger project.
“We’re in a more balanced market, so you can feel out if the property needs work,” Harn says. “If it does, the seller might be willing to buy down the interest rate, provide remodel credits, or accept a price reduction. The agent’s role is to know the inventory well, understand what the clients are looking for, and work with them on putting their best foot forward. Sometimes, that could mean going in $50,000 below asking and seeing where the seller lands.”
5. Are You Prepared for Surprise Costs?
While the home you’re eyeing looks perfect, it might come with hidden concerns (and hefty costs) that even the best inspector can’t catch, or future issues that pop up over time.
“When you go into home ownership, there are surprises—a roof leak, the heater going out,” Harn adds. “And then utility bills, which often cost significantly more if you’re going from renting an apartment to buying a home.”
6. How’s the Market Today?
Harn says the market is more balanced these days, and the number of days it takes for a seller to accept an offer is on the rise. That leaves room for more negotiating by the buyer, especially because interest rates are keeping the number of potential buyers low.
“It’s not 100% a seller’s market or 100% a buyer’s market; it’s somewhere in what we call a ‘normal market,’ where things take longer and both parties may need to negotiate,” Harn explains. “If you can find something on budget that meets your needs with a negotiable seller, that may be a really good opportunity to act before the rates drop down. You may not be getting the absolute lowest interest rate, but you can always refinance down the road.”
Article originally published by Sunset Magazine.