How much home can you afford in San Antonio? What do you want to pay?

 Yes, it is a seller’s market and home prices have been going up in San Antonio. But interest rates are still historically low. And those rates have more of an impact on what you can afford to buy than prices.

For example, if you’re looking for the average priced home in San Antonio, as of June 2014 it would be a little less than $225,000. How much would you pay each month with a 20% down payment to avoid paying private mortgage insurance on a 30-year fixed rate mortgage?

A mortgage of $180,000 at 4.25% equals a principal and interest payment of $885. That is less than renting a 1-bedroom apartment (not including taxes and insurance).

What if you waited for home prices to go down, and meanwhile interest rates went up? Here’s what your payment would look like:

$180,000 at 4.5% equals a monthly payment of $912

$180,000 at 4.75% equals a monthly payment of $939

$180,000 at 5% equals a monthly payment of $966

$180,000 at 5.25% equals a monthly payment of $994

$180,000 at 5.5% equals a monthly payment of $1,022

$180,000 at 5.75% equals a monthly payment of $1,050

An increase of 1.5% in interest rates would make your principal and interest payment go up more than $150 a month in this price range.

What about if you want to keep your payment under $900? How much home could you afford to buy with that payment?

To recap, a $225,000 sales price with 20% down at 4.25% equals a principal and interest payment of $885.

$221,250 sales price at 4.5% equals a monthly payment of $897

$215,000 sales price at 4.75% equals a monthly payment of $897

$209,375 sales price at 5% equals a monthly payment of $899

$203,125 sales price at 5.25% equals a monthly payment f $897

$197,500 sales price at 5.5% equals a monthly payment of $897

$192,500 sales price at 5.75% equals a monthly payment of $899

You can see that a 1.5% hike in interest rate will lose you more than $30,000 in purchasing power.

It might even be worth getting a 15-year fixed rate mortgage in order to save even more on interest if you’re going to live here for a few years. Interest rates are even lower for 15-year loans, typically 0.25% to 0.5% lower. That will result in significant savings for you.

My advice? Take advantage of these low interest rates while you can.