What Is The Average Monthly Mortgage Payment?

Housing costs are a major expense for American budgets. Although every homeowner has a different situation, nailing down the average mortgage payment is illuminating.

We will take a closer look at the available data to see what the average homeowner is paying for their monthly mortgage. The information can help you see where your mortgage payment stands. However, it’s important to note that your mortgage costs will likely vary from the average.

What Is The Average Mortgage Payment In The U.S.?

The median monthly mortgage payment in the U.S. is $1,672, based on the most recent U.S. Census Bureau 2021 American Community Survey.

While many American homeowners pay less than $1,600 for their mortgage, there is a wide range of housing costs. For example, over 50,000 households pay less than $200 in housing costs, while over 7 million households pay more than $3,000 in monthly housing costs.

The location has a big impact on your monthly housing costs. Below, you’ll find the median monthly housing costs for the 10 most populous states.

How Has The Average Mortgage Payment Changed Over Time?

Over the last several years, the average mortgage payment has increased. As the cost of living rises, mortgage payments seem to rise too.

Median Vs. Average Monthly Mortgage Payments

The average involves adding up all the mortgage payment data and dividing it by the number of homeowners. In contrast, the median involves lining up all the mortgage payment data in numerical order and selecting the number physically in the middle.

Generally, looking at the median will give you a better sense of what homeowners typically pay because it isn’t skewed by outliers in the way that averages can be.

Factors Affecting Average Monthly Mortgage Payments

The average mortgage payment is determined by all the same factors that make up each individual borrower’s monthly mortgage payment, just on a larger scale that reflects all the choices people of a given population make. After all, behind any average or median are millions of individuals, each going about their lives and making the decisions that make the most sense for them.

If you’re a hopeful home buyer looking at these averages, it’s important to remember that your own mortgage is going to depend on factors that are unique to your situation, and your monthly payment might end up being anything but average. That’s why it’s a good idea to understand what factors can influence a mortgage payment, so you understand the why behind the averages.

Local Housing Markets

The conditions of your local housing market can have a big impact on what you and other homeowners in your area will ultimately end up paying each month.

If you’re in a high-cost market like San Francisco or New York City, for example, you’ll likely have a relatively large monthly payment due to the size of the loan you’ll be taking on.

Nationwide housing market trends can impact your monthly payment as well. For example, mortgage rates increase and decrease in part due to fluctuations in the larger economy. Your mortgage interest rate will have a significant impact on how much you pay each month; the higher your rate, the more you’ll pay.

Home Price

Your home buying budget will have the biggest impact on how much you’ll pay each month for your mortgage, because it will determine the size of your home loan. The larger the loan, the more you’ll pay. However, you have the option to make a larger down payment to bring down the cost of your monthly mortgage payment.

Interest Rates

In addition to your loan amount, often referred to as principal, your interest rate will be a major factor in determining how much you pay each month.

Average mortgage rates can fluctuate daily and are influenced by things like economic trends and policy decisions. Your own mortgage interest rate will be influenced both by these larger trends as well as individual factors, such as your credit score, loan amount, down payment, loan type, and even your location, as average rates can differ depending on what state you’re in.

As interest rates rise, this may continue to push average mortgage costs higher.

Homeowners Insurance

If you use a mortgage to purchase your home, you’ll need to pay for homeowners insurance. Lenders will typically include a portion of your homeowners insurance premium in each of your monthly mortgage payments and pay the full premium out of an escrow account on your behalf when it comes due. How much you’ll have to pay for homeowners insurance will depend on a lot of different factors, including your home’s condition, location and replacement cost and how much coverage you purchase.

It’s important to note that your homeowners insurance premium can change from year to year. For example, you may find your costs go up after putting in a pool or making value-adding upgrades to your home.

On a larger scale, overall homeowners insurance rates may increase due to things like inflation or rising construction costs.

Loan Terms

Loan term, or the amount of time you have to pay back your loan, will directly impact the size of your monthly payment. For example, borrowers with a 30-year loan term have more time to pay back their loan, so their monthly payments will be lower than someone with a comparable 15-year loan term.

Mortgage Insurance

Depending on your loan type and the size of your down payment, mortgage insurance may also be included in your monthly payment.

For conventional loans with a down payment below 20%, you’ll pay private mortgage insurance (PMI) as part of your monthly mortgage bill. PMI protects your lender and helps borrowers get into homes with lower down payments, but it comes at a cost. How much you’ll pay will depend on the size of your loan relative to the value of your home and your credit score.

FHA loans also have a form of mortgage insurance called a mortgage insurance premium (MIP) that is paid both upfront and annually. How much your MIP will add to your overall monthly mortgage payment depends on the size of your down payment and your loan term and amount. All FHA loans come with MIP, regardless of how much you put down.

Property Taxes

Like homeowners insurance, your property taxes will generally be included as part of your monthly mortgage payment and paid out on your behalf by your mortgage lender.

Your property tax rate will have a significant impact on your monthly mortgage payment, and how much you’ll pay will depend on your home’s value and where you live. According to the American Housing Survey, homeowners spend a median of $198 each month on property taxes.

Also, like homeowners insurance, your property taxes can change each year, often because of a change in home value or an increase in local tax rates.

How Does The Average Monthly Mortgage Payment Affect You?

Averages can be helpful in showing you what people typically pay. But when planning for your expected costs as a homeowner, it’s much better to base your anticipated monthly payment on the factors that are unique to you: your home buying budget, your planned down payment, the interest rate you’re likely to get and the area you plan on purchasing in.

To get an idea of how much you might pay for a mortgage each month, try using an online mortgage calculator – like this one from Rocket Mortgage®. These calculators let you input those unique factors and give you an estimate that’s specific to your circumstances.

The Bottom Line: The Average Mortgage Payment Is Only A Reference

The average monthly mortgage payment is a helpful reference point. But as you consider homeownership, the unique details of your situation will impact your actual mortgage costs. If you’re ready to move forward with buying a home, get preapproved with Rocket Mortgage.