US-based real estate marketplace Zillow has launched a new search tool that enables buyers to look for properties based on what they can afford to pay per month.
Instead of showing property search results by listing price, the new filter shows the homes according to their “all-in monthly cost”, which includes principal and interest for mortgage repayments, insurance cost estimates, taxes and Homeowners Association (HOA) fees.
Buyers can use the monthly payment filter now on the Zillow app.
The new filter comes on the back of a dramatic rise in mortgage rates and monthly costs, which are now $431 higher than in March 2022.
High rates combined with record-breaking home appreciation have nearly doubled monthly mortgage costs since 2020, according to Zillow.
Rates are also extraordinarily volatile. Home prices nationwide started falling in June and flatlined this year, but shifting mortgage rates often swung costs by more than $100 month to month.
“Buyers looking at list prices struggle to figure out what they can really afford, because the mortgage rate is what makes or breaks a monthly payment,” Zillow Home Loans Consumer Finance Expert Amanda Pendleton said.
“Adding in costs like taxes, insurance and HOA fees can quickly bust a shopper’s budget.
“This new search tool does the maths, so buyers can confidently jump into finding a home they love and can afford.”
Buyers can start with Zillow’s linked affordability calculator, entering their deposit amount, income and debts to estimate the monthly mortgage cost they can afford.
Then they enter their monthly budget range into the filter to start searching for homes.
Updated mortgage rates feed into the filter, showing homes and hiding others to keep buyers on budget as rates and price cuts change the monthly payment calculations.
A new survey from Zillow Home Loans found the most difficult financing activity for prospective home buyers was understanding all costs associated with a mortgage payment, followed by figuring out how much home they can afford, and researching mortgages and rates.
“Fast-rising mortgage rates last year pushed monthly costs up with unprecedented speed, dragging affordability to its lowest point in more than 20 years,” Zillow Home Loans Senior Macroeconomist Orphe Divounguy said.
“Beyond the high costs, volatile mortgage rates have made it extremely difficult to plan and budget to buy a house.”
The new filter — coming soon to Zillow.com — is the latest Zillow technology helping buyers navigate a challenging affordability landscape.
Earlier this year the portal also launched a new AI-powered feature that lets prospective buyers search for homes in the same way they would describe it to their friends and family.
Instead of going through the tick-a-box of property features, searchers can now type phrases like ‘$700,000 homes in Charlotte with a backyard’ or ‘open house near me with four bedrooms’ directly into the Zillow search bar.