Stop waiting for a rate that the forecast says is not coming soon, and start with the only number that actually matters: the monthly payment you can live with.
On October 19, the Mortgage Bankers Association released its October 2026 forecast. The MBA expects the 30-year rate to average 7.3% in the fourth quarter of 2026 and to stay above 7% through 2027. Purchase originations are forecast to rise just 0.8% to $1.42 trillion next year, while refinance originations are expected to fall 17% to $571 billion, because so few borrowers have a rate worth refinancing out of. Bankrate's national average, reported October 19, put the 30-year fixed at 7.46% and the 15-year fixed at 6.82%, unchanged from Friday.
Translation: plan on today's rates, not on a rescue. Here is how to run your own affordability math.
Start With the 28/36 Rule, Then Go Further
The classic guideline is simple. Keep your total housing payment at or under 28% of your gross monthly income, and keep all of your debt payments together, housing included, at or under 36%.
The math is easy to run on yourself. On a $100,000 salary, gross monthly income is about $8,333. Twenty-eight percent of that is about $2,333 a month for housing. That housing number is not just principal and interest. It has to cover property taxes, homeowners insurance, and HOA dues if you have them. In a lot of markets, taxes and insurance are the part of the payment buyers underestimate the most.
Then check the second number. Add up your car payment, student loans, credit card minimums, and other debts on your credit report. If those eat up too much of the 36%, they shrink the house you can carry, no matter what a calculator headline says.
Your Approval Amount Is a Ceiling, Not a Budget
Lenders can often approve you for more than the 28/36 guideline, using higher debt ratios. That approval is the maximum a lender thinks you can repay. It is not a statement about what you can afford to live on.
You live on take home pay, not gross pay. Groceries, gas, childcare, and savings do not show up in a lender's ratio, but they show up in your life every month. Buyers who shop at the top of their approval find that out in month two.
Compare Total Monthly Expense, Not the Shiniest Rate
At rates above 7%, an eighth of a point between lenders is not the decision. Your total monthly expense is. Compare offers on the full payment, the cash you need to close, and what the loan costs you over the time you actually expect to keep it.
That same thinking applies to buydowns. A temporary buydown lowers the payment for a year or two, then steps up. A permanent buydown through points costs cash up front and only pays off if you keep the loan past the break even point. Run both against your real monthly budget instead of chasing the lowest number on a flyer.
The Bottom Line
With the MBA expecting rates above 7% through 2027, waiting is a plan only if your life can wait. For everyone else: run the 28/36 math, count taxes and insurance honestly, subtract your other debts, and set a monthly payment ceiling before you tour a single house. Educate yourself first, then go shopping with a number you chose, not one a lender chose for you.
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Frequently Asked Questions
How much house can I afford on a $100,000 salary?
Start with the payment, not the price. At $100,000 a year, the 28% guideline gives you about $2,333 a month for your total housing payment, including taxes, insurance, and HOA. The home price that fits depends on your down payment, your local taxes and insurance, and your other debts, which is why two buyers on the same salary can afford very different houses.
What is the 28/36 rule?
It is a budgeting guideline for mortgage affordability: no more than 28% of your gross monthly income on housing costs, and no more than 36% on all debt payments combined, including the new mortgage, car loans, student loans, and credit card minimums.
Should I buy the maximum house I am approved for?
Usually not. An approval is a lender's maximum, based on gross income and set ratios. It does not account for your actual living expenses or savings goals. Most buyers are more comfortable buying below their approval ceiling and keeping a monthly payment they picked on purpose.
Will mortgage rates go down in 2027?
The Mortgage Bankers Association's October 2026 forecast, released October 19, expects the 30-year rate to average 7.3% in the fourth quarter of 2026 and to remain above 7% through 2027. Forecasts can change, so buyers are better off planning on a payment that works at today's rates.
Know your numbers before you shop.
Get pre-approved or book a call and let's run your actual payment.
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