What Is The Average Mortgage Payment?

From down payments to mortgage payments, private mortgage insurance and homeowners insurance, there’s a lot to consider when you’re buying a home. Upfront costs are easy enough to calculate, but one important factor to consider is whether you’ll realistically be able to afford your  mortgage payment – and if you’re even ready to buy a house given your monthly income.

Of course, the specific amount of your mortgage payment will depend on many things, including the size of your down payment, your mortgage rate and the size and duration of the loan. But examining the averages in these areas can help prospective home buyers examine their budget to avoid financial headaches down the road.

When looking at typical mortgage payments, it’s important to understand the difference between the median and the average. Although both numbers can paint a picture of what you can expect – and sometimes are used interchangeably by novices – these terms are different and can therefore lead to very different results.

An average is the mean of a set of numbers. It’s calculated by taking the total of those numbers divided by the amount of numbers in the set. The median, on the other hand, is the central number in the range – meaning half the numbers are lower than the median and half are higher.

When looking at mortgages, medians tend to be more accurate, as averages can be easily impacted by extremely high or low rates. The U.S. Census Bureau reports median payments, which represent a broader range of homeowners across the country.

The median monthly mortgage payment in the U.S. is $1,100, based on the most recent American Housing Survey data provided by the U.S. Census Bureau.

The average monthly mortgage payment is not as easy to calculate, as there is no official government source to pull from. However, we can start by looking at data from the 2020 National Association of REALTORS^® Profile of Home Buyers and Sellers.

According to this study, the national median home price is $272,500 and the median down payment is 12% of the purchase price. This brings the total loan size to $245,250. Note that this does not take into account any closing costs, HOA fees, homeowners insurance or any outside expenses. A mortgage calculator may help you to further estimate your total housing costs.

State-By-State Average Mortgage Payments

Another factor to strongly examine when looking at average and median mortgage payments is location, because both home prices and mortgage interest rates vary widely between states.

In the chart below, we’ll compare median monthly home payments as well as the average individual mortgage debt balance across all 50 states.

New homeowners may not realize each of the expenses that go into their mortgage payment. Monthly payments include:

• Principal: The principal is the amount of money you borrow when you initially take out your mortgage. This can be calculated by subtracting your down payment from the home’s selling price.
• Interest: This makes up the second major part of your monthly house payment and serves as the money you pay your mortgage lender in exchange for their giving you the loan. Interest rates are typically determined using an annual percentage rate (APR).
• Property taxes: The taxes you pay on your property go to your local government to fund road repair, public schools, fire departments and more. New homeowners may be surprised to learn property taxes can be one of the most expensive parts of the mortgage payments.
• Homeowners insurance: Although it’s not legally required to own a home, most mortgage lenders will not provide a loan without homeowners insurance. This covers damage from home fires, break-ins and more.
• Homeowners association (HOA): If your home is in an HOA community, there are certain rules, regulations and fees that come with it. This is most common with townhouses, multi-unit apartment buildings and condominiums. The fees you pay for belonging to an HOA may assist in trash pickup, landscaping, security and maintenance, and also provide access to the amenities on property.

Information is power – and when you’re considering making a substantial purchase like a property, it’s important to take advantage of all the information available to determine if you’re financially ready to buy a house. But remember that these medians and averages are just a guide, and the specific details of your loan will depend on the home price, the size of your down payment, the number of extra payments you make and your interest rates.

If you’re looking for more ways to be financially frugal, learn more about how to lower your mortgage payment!