What Is the Average Monthly Mortgage Payment?
The median monthly mortgage payment for U.S. homeowners is $1,100, according to the latest American Housing Survey from the U.S. Census Bureau.
That’s down slightly from the previous study when the average American paid $1,030.
What Does Average Represent?
The U.S. Census Bureau reports the median payment, which is not the same as the average. Averages can get skewed by extremely high or low values, and the median gives a better representation of where the middle is for a broad range of homeowners.
National averages: Looking at averages from another data source, the 2019 National Association of REALTORS® Profile of Home Buyers and Sellers shows a national median home price of $257,000. If we assume a median down payment of 10% of the purchase price, we can calculate a loan size of $231,300. Applying current mortgage loan rates, you can estimate the following average monthly mortgage payments:
- $1,140 per month on a 30-year fixed-rate loan at 3.29%
- $1,646 per month on a 15-year fixed-rate loan at 2.79%
First-time home buyers: The national averages include all homeowners, including those who have built up equity, worked their way up the pay scale, and established high credit scores. Those individuals are more likely to take on larger loans and get approved for them.
First-time home buyers typically have fewer resources available and buy less expensive homes, so let’s assume a purchase price of $200,000. According to the National Association of REALTORS®, first-timers often make 6% down payments. Given that information, average payments would be:
- $1,029 per month on a 30-year fixed-rate loan at 3.29%
- $1,486 per month on a 15-year fixed-rate loan at 2.79%
However, putting down less than 20% means you'll likely need to pay mortgage insurance, and you pay more interest (among other things). Now, let’s assume a first-time homebuyer gets buys that less-expensive home and makes a down payment of 20%. That larger down payment helps bring down monthly mortgage payments substantially. Assuming a 20 percent down payment, the numbers would change:
- $906 per month on a 30-year fixed-rate loan at 3.29%
- $1,295 per month on a 15-year fixed-rate loan at 2.79%
Cash flow for buyers with a larger down payment would improve by $150 per month on 30-year loans and $228 per month on 15-year loans.
Housing markets: The numbers above look at national median reports. Your monthly mortgage payment will depend on the specifics of the market in which you buy. Coastal and city homes are typically more expensive, and in middle America, houses cost less. Comparing your payment to a national average mortgage payment might not provide useful information.
For example, Zillow reports that the median home price in San Diego, California is $652,175, which is far more than the national median. Even with a 20% down payment, the monthly payment on a 30-year loan at 3.29% would be $2,813.
Meanwhile, the median home price in Omaha, Nebraska is $193,062. With a 20% down payment, Omaha residents pay just $877 on that 30-year loan.
Mortgage Payment Components
A monthly mortgage payment is primarily based on three factors:
- The loan amount
- The interest rate on your loan
- The term, or number of years until you pay off a loan with the scheduled payment
With that information, it’s easy to calculate the monthly payment required to pay principal and interest on a loan. But homeowners might have to pay additional monthly expenses that are not directly related to the loan. For example, the following costs often get included in calculations for average mortgage payments:
Borrowers with high credit scores get the best interest rates, and the interest rate is one of the key factors in the monthly mortgage payment calculation that could drive the payment higher.
The best rates, similar to the rates quoted above, are typically available for borrowers with FICO scores above 760. Borrowers with bad credit, which might begin with scores below 620 or so, may have a hard time qualifying for a standard home loan and low interest rates.
For those with bad credit histories, and people who have lived without using credit, it’s still possible to borrow. Look for lenders who offer manual underwriting and will have somebody review your “alternative” financial history to evaluate creditworthiness.
More Than the Monthly Payment
If you’re trying to figure out how much to spend on a home, remember that there’s more to your home purchase than the loan payment.
Taxes and insurance are often added to your monthly payment automatically. Your lender collects funds from you, places the money in escrow, and pays required expenses on your behalf.
Homeowners Association (HOA) dues might also be a significant monthly expense. Those costs cover a variety of services in your community or building, and skipping those payments can lead to liens on your property, and potentially even foreclosure.
Other costs of home ownership can be surprisingly high. You might not pay those expenses monthly, but it’s helpful for some people to budget for a monthly savings amount for those costs. You need to maintain your property, replace appliances periodically, and more.
Some people suggest a budget of 1% of your property value each year for maintenance. But it’s easy to go higher than that, especially with older properties. If you need to buy furniture or make upgrades before moving in, you face additional up-front costs.
United States Census Bureau. "American Housing Survey (AHS)." Accessed March 18, 2020.
National Association of REALTORS. "2019 Profile of Home Buyers and Sellers," Page 7. Accessed March 18, 2020.
National Association of REALTORS. "2019 Profile of Home Buyers and Sellers," Page 8. Accessed March 18, 2020.
Consumer Financial Protection Bureau. "How to Decide How Much to Spend on Your Down Payment." Accessed March 18, 2020.
Zillow. "San Diego Home Prices & Values." Accessed March 18, 2020.
Zillow. "Omaha Home Prices & Values." Accessed March 18, 2020.
Experian. "What Is a Good Credit Score?" Accessed March 18, 2020.
Consumer Financial Protection Bureau. "Seven Factors That Determine Your Mortgage Interest Rate." Accessed March 18, 2020.
Quicken Loans. "Mortgage Payments Explained." Accessed March 18, 2020.