First-time buyers: budget before lenders

Many Americans are wondering whether the housing market has finally begun turning a corner—or if uncertainty is still here to stay. After years of elevated mortgage rates, stubbornly low inventory, and affordability concerns, the question feels more relevant than ever.

Today, mortgage expert Dale Vermillion, author of Navigating the Mortgage Maze: The Simple Truth About Financing Your Home, joined the show to weigh in on what the 2026 housing landscape may look like and how today’s buyers and sellers can navigate it with wisdom.

A More “Normal” Market Returns

According to Vermillion, the extreme swings of recent years may finally be behind us.

“It isn’t the market of 2020–2021 when rates were in the twos, threes, and fours,” Vermillion explains. “But it’s also certainly not 2008. This is a very normal market.”

He noted that although many think of today’s mortgage rates as high, they are actually below the 30-year average. Inventory is rising, sales are stabilizing, and government attention on housing has increased. Together, these factors point toward a gradual shift into a buyer’s market—a welcome change for those who’ve spent the last few years watching listings disappear before they could schedule a tour.

A common frustration remains: if rates have risen, why haven’t prices fallen faster?

The answer is complex. While price increases largely flattened this year (+0.7%), Vermillion notes that the market remains regional rather than national. Certain areas have softened, but not enough to drive a nationwide price reset.

A major reason: the “lock-in effect.” Millions of homeowners refinanced below 3% in 2020–21 and weren’t willing to trade those rates for a higher one. But as Vermillion observes, that dynamic is fading. For the first time in years, more loans now exist above 6% than below 3%, allowing inventory to loosen.

Why Fed Rate Cuts Don’t Equal Lower Mortgage Rates

Even though the Federal Reserve has been cutting rates, mortgage rates haven’t always followed. That’s because mortgage rates are tied more closely to the bond market, inflation data, and job reports—not directly to the Fed’s benchmark rate.

Another overlooked factor: mortgage-backed securities (MBS). When the government increases MBS purchases, mortgage rates often decline more reliably than when the Fed cuts consumer rates.

The emotional side of the housing market can’t be ignored. The bidding wars of 2020–21 left many would-be buyers discouraged. But Vermillion believes attitudes are shifting:

“Inventory is up from roughly 450,000 units nationally early last year to over a million now. So from a buyer standpoint, it’s time to be encouraged again.”

With more sellers re-entering the market, buyers have choice again—and choice increases leverage.

Vermillion stressed that affordability challenges today are driven as much by property taxes and insurance costs as by mortgage rates. Homeowners in several states have seen insurance premiums and assessments climb dramatically—sometimes outpacing wage growth.

For aspiring first-time buyers, budgeting remains the first step. Vermillion’s advice: determine what you can afford before visiting a lender, rather than letting a lender tell you what qualifies on paper.

For First-Time Buyers: Get Pre-Approved, Not Pre-Qualified

A true pre-approval involves:

• A full application
• Credit check
• Income verification
• Documentation of debts and assets

This makes offers more competitive and prevents buyers from shopping at unrealistic price points.

During the pandemic boom, paying $20,000–$50,000 above asking price became the norm in many markets. Vermillion notes that this period has largely ended:

“Homes today are selling around 94–97% of the listing price in most areas. We’re not seeing bidding wars like before.”

For buyers, that’s stabilizing. For sellers, it simply resets expectations toward reality.

Move-Up Buyers: Timing May Be Better Than You Think

For homeowners considering a move—whether for space, schools, or lifestyle—Vermillion’s advice mirrors that given to first-time buyers: set a realistic budget and lean on wise counsel.

Sellers should also invest in preparing their homes to show well, as presentation still drives both speed and price.

Vermillion believes 2026 may be a strategic window:

“I think this is the year to do it. Rates may come down a little more, but not dramatically. Buyers and sellers who plan well and manage expectations can succeed in this environment.”

From a stewardship standpoint, the takeaway is simple: markets change, rates fluctuate, and headlines swing. But Christians are invited to place their confidence not in economic cycles but in the Lord, “who establishes our steps” (Proverbs 16:9).

A wise plan, a realistic budget, and sound counsel can go a long way—especially in a year where the housing market is finally beginning to level out.

On Today’s Program, Rob Answers Listener Questions:

• I’m looking for a trustworthy and affordable tax preparation service. Are there any organizations I should avoid? And are there any Christian-based or low-cost options—especially for seniors?
• I’m turning 65 soon, and I’m debt-free. I want my condo to go to my children when my wife and I pass away. Should I use a will, put them on the deed, or create a trust? What’s the best approach?

Resources Mentioned:

• Faithful Steward: FaithFi’s Quarterly Magazine (Become a FaithFi Partner)
• Navigating the Mortgage Maze: The Simple Truth About Financing Your Home by Dale Vermillion
• Our Ultimate Treasure: A 21-Day Journey to Faithful Stewardship
• Wisdom Over Wealth: 12 Lessons from Ecclesiastes on Money
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA)
• FaithFi App

Remember, you can call in to ask your questions every workday at (800) 525-7000. Faith & Finance is also available on Moody Radio Network and American Family Radio. You can also visit FaithFi.com to connect with our online community and partner with us as we help more people live as faithful stewards of God’s resources.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.