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What a mortgage rate actually does to what you can afford

Everyone knows higher rates mean a higher payment. The number people don't have is what a rate does to the price they should be shopping at — because that requires holding your whole financial life constant and re-solving for the ceiling, which is exactly what a simulation is for. So: one illustrative household ($220,000 income, buying with 20% down, targeting retirement by 60), simulated across a thousand futures at each rate. Only the mortgage rate moves.

The table most calculators can't produce

For each rate, the highest purchase price where at least 85% of simulated futures still reach financial independence on time — the "comfortable ceiling" — plus the all-in monthly cost of the same $650K reference house:

Read the ends of that table again: between 5% and 7.5%, the same household's comfortable ceiling moves by roughly $65K. Nothing about the household changed — not income, not savings, not discipline. The rate alone repriced what "affordable" means.

Why the effect is bigger than the payment math

The naive calculation says a point of rate on a 30-year mortgage changes the payment by roughly 9–10%. But the payment isn't what the simulation grades — it grades what the payment crowds out. Every extra dollar of interest is a dollar that doesn't reach your portfolio that year, and the portfolio is compounding. A rate increase therefore hits twice: once in the monthly budget, and again — silently, for thirty years — in the investment stream that was supposed to fund your independence. The ceiling falls faster than the payment rises.

There's a third hit for buyers near the edge: at higher rates, more simulated futures breach the forced-sale guardrail (a layoff arriving while the budget is tight), and the planner's search caps the recommendation there regardless of the average case.

What to do with this

Shop the ceiling, not the payment. When rates move while you're house hunting, re-run your ceiling instead of re-anchoring on last month's listing prices — the planner recomputes it in about a second. Price a buydown honestly. Paying points is buying a lower rate with money that would otherwise compound; the simulation can grade that trade for your specific numbers (put the points into closing costs and drop the rate). Don't wait on rates alone. A rate you don't like today can be refinanced later; a price you overpaid can't be un-paid — the fuller argument is in the timing guide.

The illustrative household here is the planner's default — married filing jointly, $220,000 income, $6,500/mo non-housing spending, 20% down, 1,000 fixed-seed paths per rate. Your ceiling sits somewhere else; start from your salary or run your exact numbers.

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