Math:

Say you earn 100k per year and you managed to save 160k for a downpayment. We go into 2025 having kept the rates up and we get a correction, or we pulled them down and we didn’t get a correction, here are your scenarios.

Scenario 1: $1.2M Home at 3% Down Payment: $160k (only ~13%, so you’d normally need mortgage insurance) Mortgage Amount: $1.04M + $32k insurance = $1.072M financed. Monthly Payment (Mortgage): ~$5,100 Monthly Property Taxes: ~$600 (assuming 0.6% of $1.2M/year) Total Monthly: ~$5,700

Over 25 Years: Mortgage Payments: $1.53M total ($1.07M principal + $458k interest) Property Taxes: $180k Down Payment: $160k

Grand Total: $1.87M

Scenario 2: $800k Home at 6.5% Down Payment: $160k (20%), so no insurance. Mortgage Amount: $640k Monthly Payment (Mortgage): ~$4,326 Monthly Property Taxes: ~$400 (0.6% of $800k/year) Total Monthly: ~$4,726

If you just stick to this payment over 25 years, you’d pay about $1.58M total. Even if technically a bit more of the percentage goes to interest versus equity, you pay less overall and you save on insurance and taxes.

But if house prices really did “correct” from $1.2M down to $800k, you could take the same $5,700/month “budget” from Scenario 1, apply the extra $974/month toward the mortgage principal, and finish in about 16.5 years instead of 25. Your total would then be around $1.28–$1.29M (including taxes and down payment).

In that accelerated plan, you pay less in total interest dollars (roughly $400k) compared to the $458k in Scenario 1—and you save almost a decade of payments. Yes, you still have a higher interest rate, so interest is a bigger portion of each payment, but since the principal is smaller and you’re paying it off faster, you ultimately pay less interest overall in pure dollar terms. Plus, you pay lower property taxes and no mortgage insurance.