The Quick Read: As of September 28, 2026, the size of your down payment is only one piece of the affordability puzzle. Freddie Mac’s survey put the 30-year fixed at 7.03% for the week ending September 24, the fourth straight weekly increase. The Fed raised its target range on September 16. Meanwhile, builders are cutting prices and handing out incentives, and inventory is the deepest in over ten years. Buyers now have more to negotiate with than they did a year ago.
Key Takeaways
- Mortgage rates rose four weeks in a row, up 37 basis points from 6.66% to 7.03% in Freddie Mac’s survey, and 73 basis points above a year earlier.
- Builders are discounting hard. NAHB data cited by Inman shows 38% cut prices in September and 66% used incentives.
- Existing-home inventory hit a 4.9-month supply in August. That gives resale buyers room to negotiate.
- Fannie Mae’s planned PMI outreach is a policy change, not automatic relief. Details were not yet published.
- A bigger down payment helps, but the rate and the seller’s or builder’s concessions can move your monthly cost more.
What Changed
Rates climbed for a fourth straight week. Freddie Mac’s survey averaged 6.66% for the week before September 3. It then printed 6.71% on September 3, 6.76% on September 10, 6.95% on September 17 and 7.03% on September 24. That is 37 basis points in four weeks. A year ago the same survey read 6.30%.
Other gauges sit higher. The MBA’s weekly survey, released September 23, put its 30-year contract rate at 7.12% for the week ending September 18, up from 6.97%. WRE News reported the Mortgage News Daily index at 7.50% on September 28. I couldn’t confirm that figure on the index’s own page, so treat it as reported.
Why the gap? Each measure uses a different borrower profile and method. Freddie’s number covers conventional, conforming purchase loans for borrowers with 20% down and excellent credit. It is not a measure of what a low-down-payment or non-QM borrower would see. No single figure is “the” rate. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Fed hiked. On September 16, the FOMC voted 12–0 to raise the federal funds target range by a quarter point, to 3-3/4 to 4 percent. CNBC called it the first hike since 2023. Officials also signaled another possible increase this year.
A quick correction to a common belief: the Fed doesn’t set mortgage rates. Mortgage rates track long-term Treasury yields and mortgage-bond pricing. The Fed’s move matters because it feeds into both. ConsumerAffairs, citing Treasury data, reported the 10-year yield closed at 4.97% on September 14 and moved above 5% the next day. It was 4.19% at the start of the year. WRE News reported an intraday high of 5.27% on September 28. I’d call that reported, not confirmed.
Buyers pulled back. The MBA’s unadjusted Purchase Index for the week ending September 18 was 11% lower than a year earlier. The refinance index was 62% below a year earlier. Rate-driven refinancing has mostly dried up.
Resale inventory rose. NAR’s August report, released September 10, showed existing-home sales down 2.0% from July. Inventory reached 1.62 million homes, a 4.9-month supply, up from 4.6 months in July. The median price was $429,100, up 1.6% from a year earlier. NAR’s chief economist said the supply is the highest in over ten years and gives buyers better chances to negotiate.
Realtor.com’s August report, released September 2, told a softer story on list prices. The median list price was $424,500, down 1.3% year over year. About 20.4% of active listings had a price cut, level with a year earlier. Delistings ran 12.6% below last year’s pace. Sellers are patient, not panicked.
Builders are discounting. The NAHB Housing Market Index for September, as reported by Inman, showed 38% of builders cutting prices, up from 35% in August. The average cut was 6%. Some 66% used incentives, the highest share since December.
Census data released September 24 showed August new-home sales at a 684,000 annual rate. That is 6.4% above July’s revised figure and 2.0% below a year earlier. HousingWire noted the monthly change carries a wide margin of error. Don’t read it as a recovery. There were 483,000 new homes for sale, an 8.5-month supply. Scotsman Guide reported the median new-home price at $393,700, nearly 6% below a year earlier. New homes have priced below existing homes for six straight months.
What Does That Mean for a Home Buyer With a Small Down Payment?
It means the down payment is no longer the whole story. Two buyers can put the same money down and end up with very different monthly costs, depending on the rate they lock and the concessions they negotiate.
Consider the gap between a year ago and now. A 73-basis-point rise in the benchmark is a bigger swing than most buyers can offset by stretching their savings. Run a plain hypothetical: if a rate moves from 6.3% to 7.0%, the difference is most of a full point. Covering that with extra cash down means a lot of extra cash.
Builder incentives work on the other side of the ledger. HousingWire reports builders are buying down rates and moving to lower price points, and that the pressure is most acute among first-time and affordability-driven buyers. A builder-paid rate buydown or closing-cost credit can do more for monthly cost than the same dollars added to a down payment. That isn’t always true. It depends on the terms, how long the buydown lasts, and what the price would be without it. Compare the deal with and without the incentive.
Lender qualification is the other wall. HousingWire reports that Lennar said about half of prospective visitors last quarter failed to qualify for a mortgage. Higher rates tighten the income a buyer needs. That is where programs built for smaller down payments come in. Down payment assistance programs exist to bridge the cash gap, and they qualify buyers on their own terms and guidelines. The product page carries the current details. Eligibility is subject to lender guidelines.
What About Private Mortgage Insurance?
A smaller down payment usually means private mortgage insurance, or PMI. That is a monthly cost the lender requires when you put down less than a full 20%. It can be cancelled later, once you’ve built enough equity.
In mid-September, FHFA Director Bill Pulte said Fannie Mae will align with Freddie Mac so servicers can proactively contact borrowers who may qualify to cancel PMI because of home appreciation or paydown, HousingWire reported. His post was dated September 15. Under Fannie’s current servicing guide, servicers “must not solicit” cancellation requests based on current value, per NTD’s account.
Read this carefully. The change covers outreach only. It is not automatic cancellation. WRE News noted that FHFA had posted no detailed implementation bulletin when it reviewed the announcement. Eligibility still depends on your equity, payment history and a valuation. So it is good news for the long game, but not something to count on when you price a purchase today.
My take: the policy makes a smaller down payment a little less sticky. You can start with less cash, and later have an easier path to shed the insurance as your home appreciates. That is a real benefit. It is also a future one.
My Take
Here’s my read. The buyers who wait for rates to fall back to last year’s levels are making a bet on the Fed and the bond market. Neither is cooperating. The Fed hiked, and officials are split on 2027. CNBC reported eight officials see another hike next year, six a hold and four cuts. That is not a path anyone can plan a purchase around.
The buyers I’d pay attention to are the ones who shift the question. Instead of “how much do I need down?”, they ask “what total package can I afford?” That package has four parts: the price, the rate, the concessions and the down payment. In this market, the first and third are negotiable in a way they weren’t a year ago.
Honestly, the new-construction pitch is a genuine toss-up. Builders are cutting prices and buying down rates, and new homes are pricing below resale. But HousingWire’s own analysis asks whether builder margins can absorb rising rates, and the incentives haven’t yet produced a broader recovery. A builder that discounts now may not be able to keep doing it. Get the incentive in writing, and compare it with what a resale seller would give.
And on the resale side, the picture is mixed. NAR’s median price is still up year over year even as list prices fall. So “prices are falling everywhere” is wrong. What has changed is leverage. A 4.9-month supply isn’t a buyer’s market in the old sense, and the new-home supply of 8.5 months is a different story. Bargaining power varies by segment.
One more thing. Sales are at a soft pace. August’s 3.98 million annual rate was the first month below 4 million since June 2025. Buyers are scarce, too. That is leverage on your side, but it won’t last if rates turn.
What I’d Do Now
Lock when you like the deal. A rate lock is an agreement that holds a quoted rate for a set period while your loan is processed. Rates moved 19 basis points in a single Freddie Mac week this month. If you’ve found a house and the numbers work, don’t float and hope. If you like it, lock it.
Compare quotes from the same day. Quotes gathered on different days aren’t comparable, because the market moves between them. With rates rising, a quote from two weeks ago is stale. Put your options side by side on one day, for the same loan type.
Ask for concessions before you ask for a lower price. A seller credit toward closing costs or a builder-paid rate buydown can stretch your cash further than a small price cut. Ask for both, then compare.
Know which rate you’re reading. Freddie Mac’s survey assumes a 20% down payment and excellent credit. If your down payment is smaller or your file is unusual, expect different pricing. Use the headline surveys as a direction, not a forecast of what you’ll see. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Don’t plan around PMI cancellation yet. Treat Fannie Mae’s outreach change as a possible future help. Until FHFA publishes the details, price your purchase as if the insurance stays.
Check the assistance options early. If cash to close is your constraint, look at your options before you shop. The down payment assistance programs page carries the current guidelines. If you own a home and plan to tap equity for a second purchase, my related pieces on using home equity for a down payment on an investment property walk through how that works.
If you’re weighing a purchase or a refinance this fall, Lendmire can walk you through how the current programs fit your file. Call 828-256-2183 or request a quote.
For the end-to-end picture of how these loans work — qualification, structures, and the full process — see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Do I still need 20% down to buy a house?
No. Many programs let buyers put down less, usually with private mortgage insurance added. Freddie Mac’s survey uses a 20%-down borrower as its benchmark, which is why its number often differs from what a smaller-down-payment buyer sees. Program terms vary and are subject to lender guidelines. The product page has the current details.
Is a bigger down payment always the better move right now?
Not always. It lowers what you borrow and can reduce insurance costs. But with the benchmark rate up 73 basis points from a year ago, a builder’s rate buydown or a seller credit may move your monthly cost more than the same cash added to a down payment. Compare both on the same day.
Will Fannie Mae’s PMI change let me drop my insurance automatically?
No. It lets servicers contact borrowers who may qualify to cancel. As of the reporting I reviewed, FHFA hadn’t published a detailed implementation bulletin.
Should I buy new construction because builders are cutting prices?
It depends on the deal. NAHB data shows 38% of builders cut prices in September and 66% used incentives, and the median new-home price is below the median existing-home price. Still, the new-home supply is 8.5 months and the August sales gain wasn’t statistically significant. Get incentives in writing and compare them with a resale offer.
Should I wait for rates to drop?
I wouldn’t plan around it. The Fed hiked on September 16 and signaled another possible increase this year. If you can afford the payment at today’s market, lock when you find the right house. If you can’t, waiting won’t change that by itself.
About Lendmire
Lendmire (NMLS# 2371349) is a non-QM mortgage brokerage arranging DSCR investor loans in 41 markets — 40 states plus Washington, D.C. — and consumer mortgage programs, including bank statement, HELOC and down payment assistance options, in 16 states through wholesale lenders. Lendmire is the broker, never the lender; every file is underwritten by the lender under its own guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Primary Mortgage Market Survey
2. MBA Weekly Mortgage Applications Survey, September 23, 2026
3. Federal Reserve FOMC statement, September 16, 2026
4. CNBC, Fed rate decision, September 16, 2026
5. NAR August 2026 existing-home sales
6. Inman, August 2026 new-home sales
7. HousingWire, builder buydowns and new-home sales
8. Scotsman Guide, new-home sales
9. HousingWire, Fannie Mae and Freddie Mac PMI outreach
This article is part of Lendmire’s Mortgage News series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Why A Local Real Estate Broker Matters As Buyers Gain Leverage, September 2026? · September 2026: Buyers Need A Real Estate Agent As Supply Grows, Rates Climb · Listing Your Home For Sale This Fall As Inventory Climbs And Rates Rise
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.