If a home buyer is able to secure a private mortgage loan significantly below prevailing interest rates, what can the buyer afford to pay?

When a home buyer secures a private mortgage loan at a significantly lower interest rate than what is commonly available in the market, it effectively reduces their monthly mortgage payments. This lower payment means that the buyer can allocate more of their financial resources towards purchasing a home, increasing their overall purchasing power.

For instance, if two buyers have the same income, but one secures a loan at a lower interest rate, their monthly obligations will be lower, allowing them to afford a higher purchase price for a property. This is primarily because lenders assess how much a buyer can afford based on monthly debt obligations, which are lower for the buyer with the better interest rate.

In contrast, buyers with the same income but higher interest rates will face higher monthly payments, limiting their ability to afford as much when it comes to home price. Consequently, the buyer with the private mortgage loan at a lower rate can indeed afford to pay more for a home compared to another buyer with the same income but lacking that advantageous financing option.