After months of elevated mortgage rates in 2024, a recent decline is now making monthly home payments more affordable.

As of last week, 30-year mortgage rates declined to a 15-month low of 6.35%, according to the latest Freddie Mac data. That's down from a peak rate of 7.79% in October 2023.

Mortgage rates are linked to declining 10-year Treasury yields, which tend to decrease when there's either a downturn or uncertainty in the economy.

The decline follows slowing inflation, a cooling labor market and the anticipated end of interest rate hikes by the Federal Reserve, which is widely expected to announce its first rate cut since March 2020 in September.

The drop in mortgage payments can save you hundreds of dollars in monthly costs

Here's a look at how 30-year monthly mortgage costs vary at different interest rates, based on a U.S. median home price of $412,300 with a 20% down payment:

• 6.35% (current): $2,052
• 7.22% (May 2024): $2,243
• 7.79% (October 2023): $2,372

Compared with the peak rate in 2023, monthly mortgage costs have declined by $320. Compared with May 2024, it's a difference of $191.

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While a declining 30-year rate offers financial relief to homebuyers, it might not make a big enough difference in whether a home is affordable. Mortgages are just one cost of homeownership, alongside insurance and repairs. 

As a general rule, it's smart to keep a cash reserve worth 1% to 3% of your home's purchase price on hand to cover unexpected expenses.

See if you can afford a home based on current rates

To help you see whether a home is within your budget, use CNBC Make It's mortgage calculator to estimate your monthly mortgage payments based on the current 30-year interest rate.

Note that the calculator doesn't include additional expenses such as insurance, property taxes and private mortgage insurance, which is typically required for mortgages with less than a 20% down payment.

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