Dave Ramsey Weighs In on Fed Interest Rate Cut for Homeowners: It’s ‘Good News’

On Sept. 17, the Fed announced its first rate cut since the end of 2024, lowering rates by a quarter percentage point, to a range of 4% to 4.25%.

The news immediately sparked big questions: Will mortgage rates go down? Should I buy a home or stay put?

Personal finance author and radio host Dave Ramsey didn’t hesitate to weigh in. In a recent email newsletter to The Street, he encouraged buyers to move forward—though with a few important caveats.

“Good news! There’s still hope,” Ramsey wrote, before reminding his readers that, in truth, it matters less what the "market does" and more what prospective buyers do about their finances to get into a home.

Rates are only a small piece of the puzzle

“This is still a great time to buy a house,” Ramsey said after reviewing the recent rate changes. Though, he cautioned that mortgage rates shouldn’t be the only factor driving the decision.

“Be careful not to base your homebuying decision only on rates,” he warned, even as he acknowledged the encouraging news.

Ramsey reminded readers that the real key to homeownership is financial readiness—far more important than trying to time the market. After all, any dip in mortgage rates isn’t expected to be dramatic.

“Yes, it’s likely mortgage rates will dip a little more in 2025,” he wrote. “But don’t expect a big drop. The Federal Reserve has projected only minor changes to the federal funds rate, which—while not directly tied to mortgage rates—still plays a big role in how they move.”

His review of recent projections puts the federal funds rate at around 3.6% by the end of 2025.

“Keep in mind, 3.6% doesn’t mean mortgage rates will go that low," Ramsey added. "Mortgage rates are usually 1 to 3 percentage points higher.”

Ultimately, Ramsey stuck to his evergreen advice: Hold off on buying if you still have debt, lack a fully funded emergency fund, or haven’t saved for a down payment, or if a 15-year fixed-rate mortgage would eat up more than 25% of your take-home pay.

Other experts agree that buying now makes sense

“I’m with Dave Ramsey. Now could be a great time to buy a new home. Although the Fed rate is not directly tied to mortgage rates, the overall expectation is that mortgage rates will follow the same trajectory,” says Brian Shahwan, mortgage banker and broker with William Raveis Mortgage, part of the Melissa Cohn Group in New York City.

Shahwan explains that as the Fed continues to cut, interest on credit cards, auto loans, HELOCs, and student loans will decrease, potentially freeing up additional funds for homeowners and providing some flexibility in their debt-to-income ratio.

“Borrowers will always have the opportunity to refinance when mortgage rates ultimately go down. Other options like recasting and post-close-rate modifications may also be available if rates don’t improve anytime soon,” explains Shahwan.

Kirsten Jordan, licensed associate real estate broker at Corcoran Real Estate in New York City, agrees with Ramsey as well.

“This is definitely a great time to buy. Sellers are currently motivated—they really want to sell—so there are opportunities to negotiate and find good deals,” says Jordan.

While mortgage rates may come down further in the future, Jordan doesn’t expect a dramatic drop that would create a “windfall” scenario where buyers today feel like they missed out.

“Most mortgages can be refinanced down the road, often without needing a new appraisal, as long as your financial situation remains stable,” she explains.

While other experts insist you think twice before you buy

Eli Harris, a real estate agent at Fathom Realty in Norton, MA, believes that Ramsey’s advice ignores the fact that things don’t always go as planned. 

“As long as you're out of debt and have a solid emergency fund is easier said than done. I'm in Massachusetts, where the housing market and cost of living are high,” explains Harris.

According to Harris, many buyers are now leveraging VA, FHA, and USDA loans, which often come with the benefit of no or low down payments.

“The only two ways to reduce your monthly mortgage payment are to increase your down payment or lower your interest rate. With low or no money down, the only option becomes a better rate,” says Harris.

He explains that while a decrease of a quarter percentage point might help, it doesn’t factor in home insurance and taxes, which are on the rise, as well as repair and upkeep costs.

“That quarter percentage point savings quickly gets eaten up by other expenses,” adds Harris.

In addition, Harris reinforces that refinancing isn’t an option for everyone.

“If you can’t pay your bills, lose your job, or don’t have the best credit, your chances of a refi approval are slim,” he explains.