Interest Rates and Affordability: What Riverside Buyers Need to Know in 2025

The Inland Empire real estate market continues to evolve in 2025, and one of the biggest factors shaping buyer decisions this year is interest rates. For homebuyers in Riverside, Corona, Norco, and across Southern California, understanding how today’s rates affect affordability is essential before making a move.

At EGA Homes, we work with buyers every day who are trying to balance their dream of homeownership with rising costs. Here’s what you need to know about current mortgage rates, affordability, and how to prepare for success in today’s Riverside housing market.

What Are Mortgage Rates Like in 2025?

As of August 2025, mortgage rates have stabilized compared to the spikes we saw in 2023–2024. On average:

• Conventional loans: ~6.4%
• FHA loans: ~6.1%
• VA loans: ~5.9%

While these rates are higher than the historically low rates of 2020–2021, they are more favorable than last year’s peaks, giving buyers more confidence to re-enter the market.

How Interest Rates Affect Affordability

Interest rates directly impact your monthly mortgage payment — even more than the purchase price of the home. For example:

• On a $550,000 Riverside home with 10% down:
  • At 5.9%, your payment (principal & interest) would be around $2,940/month.
  • At 7.0%, the same home would cost $3,287/month — a difference of $347 each month.

That difference can determine whether a buyer qualifies for financing or gets priced out entirely.

Affordability Challenges in Riverside

The median home price in Riverside County sits around $585,000 as of August 2025. While this is up about 3% from last year, slower growth and stabilizing rates mean affordability is slightly improving.

Still, many buyers are feeling the squeeze:

• First-time buyers face higher barriers without equity from a previous sale.
• Middle-income families must adjust expectations, sometimes choosing smaller homes or more affordable neighborhoods.
• Veterans and FHA buyers are turning to their loan benefits to offset costs.

How Buyers Can Improve Affordability in 2025

The good news is that there are several strategies buyers can use to make homeownership more achievable this year:

1. Explore FHA and VA Loans

These government-backed loans often come with lower rates and reduced requirements. VA loans in particular offer 0% down and no PMI, saving veterans thousands.

2. Down Payment Assistance Programs

California offers over 30 programs that help with down payments and closing costs. Some Riverside buyers may qualify for up to $100,000 in assistance, making the dream of homeownership more realistic.

3. Shop Multiple Lenders

Rates can vary from lender to lender. A difference of even 0.25% can mean hundreds saved each month. Always compare offers before locking in.

4. Consider Buying Now and Refinancing Later

Many buyers are choosing to purchase now, with the plan to refinance when rates drop. This allows them to start building equity sooner rather than waiting on the sidelines.

5. Focus on Location Flexibility

Neighborhoods like Moreno Valley, Perris, and parts of San Bernardino County continue to offer lower entry points while still being close to Riverside job centers.

What This Means for Sellers

Sellers should also pay close attention to rates and affordability. Today’s buyers are more payment-conscious than ever, so pricing competitively is crucial. Homes that are staged, move-in ready, and aligned with buyer budgets will continue to attract the strongest offers.

Final Thoughts

While higher interest rates have reshaped the Riverside real estate market in 2025, affordability is gradually improving thanks to stabilizing rates and slower home price growth. Buyers who use creative strategies, take advantage of loan programs, and work with knowledgeable agents can still achieve their homeownership goals.

At EGA Homes, we specialize in helping clients navigate these challenges — whether you’re a first-time buyer, veteran, or move-up seller. Let’s talk about how today’s rates affect your buying power and create a strategy to get you into your next home.