What a 1-point rate change does to your monthly payment
“I'm waiting for rates to drop because the monthly payment is too high.”
By Jose Eduardo Hernandez · REALTOR®, KW Commercial · Nov 2026
Rates get talked about in percentages, but you live with the monthly payment. Here's the real math on a $400,000 30-year loan, principal and interest only (approximate):
| Rate | Monthly payment |
|---|---|
| 6.5% | about $2,528 |
| 5.5% | about $2,271 |
A full point is worth roughly $257 a month on that loan. Taxes and insurance come on top and don't change with the rate.
That's real money. But waiting has costs too. If prices rise while you wait, a higher price can wipe out the savings from a lower rate. And if rates drop, more buyers usually come back, which means more competition.
Three options to talk through with your lender:
- Buy now and refinance later if rates fall, keeping in mind refinancing has its own costs.
- A rate buydown, sometimes paid by the seller, to lower your payment for the first years or the full loan.
- A smaller loan, with a larger down payment or a lower price range.
Ready to start looking?
Tell me what you're looking for. I'll walk you through the numbers before you fall in love with a house.
General information for Illinois owners, buyers and sellers, not legal, tax or lending advice. Every property and lease is different; talk with an attorney, accountant or lender about your situation.