# What Is the Average Monthly Mortgage Payment?

The mean or average monthly mortgage payment for U.S. homeowners is \$1,487, according to the latest American Housing Survey from the U.S. Census Bureau.

The Census also reports that the median monthly mortgage payment for U.S. homeowners is \$1,200. That’s up slightly from the last study when the median monthly payment was \$1,100.

## What Does Average Represent?

The U.S. Census Bureau reports both the mean and the median payment. The mean is the same as average. The median is the middle value in a set of numbers. It divides the lower and higher half of values in the set.

When figuring out a typical monthly mortgage payment, finding the median value can be more useful than finding the average value. Averages can get skewed by extremely high or low values. The median gives a better idea of where the middle is for a broad range of homeowners.

National averages: Looking at averages from another data source, the 2020 National Association of REALTORS Profile of Home Buyers and Sellers, shows a national median home price of \$272,500. If we assume a down payment of 10% of the purchase price, we can calculate a loan size of \$245,250. Applying current mortgage loan rates, you can estimate the following average monthly mortgage payments:

• \$1,700 per month on a 30-year fixed-rate loan at 3.29%
• \$2,296 per month on a 15-year fixed-rate loan at 2.79%

First-time homebuyers: 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 folks are more likely to take on larger loans and get approved for them.

First-time homebuyers often 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 7% down payments. Given that information, average payments would be:

• \$1,307 per month on a 30-year fixed-rate loan at 3.29%
• \$1,760 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% down payment, the numbers would change:

• \$1,077 per month on a 30-year fixed-rate loan at 3.29%
• \$1,466 per month on a 15-year fixed-rate loan at 2.79%

Cash flow for buyers with a larger down payment would improve by \$230 per month on 30-year loans and \$294 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. 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 is \$808,608, 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 \$4,018.

Meanwhile, the median home price in Omaha, Neb. is \$234,639. With a 20% down payment, Omaha residents pay just \$1,245 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:

Use the mortgage rate calculator below to get a sense of what your monthly payment could end up being.

## Credit Matters

Borrowers with high credit scores get the best interest rates. 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 monthly mortgage 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 homeownership 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.

## What are the average closing costs to buy a home?

The most recent data available shows that the national average closing costs for single-family homes are \$6,837, which includes taxes.

## When is my first mortgage payment due after closing?

Your first mortgage payment is usually due on the first of the month following the first full 30 days of your closing. So if you closed on April 10th, your payment would be due on June 1st. That's because 30 days after April 10th is May 10th. Since your payments will likely fall on the first of the month, that would be June 1st.

## Why is mortgage insurance added to my monthly payment?

If you put less than 20% down, you'll likely pay mortgage insurance, or PMI, every month with your house payment. PMI is insurance for the lender that will kick in if you default on your loan and stop making payments. The lender will still be paid through the PMI policy.

### Article Sources

1. United States Census Bureau. "American Housing Survey (AHS)." Accessed June 16, 2021.

2. National Association of REALTORS. "2020 Profile of Home Buyers and Sellers," Page 7. Accessed June 16, 2021.

3. National Association of REALTORS. "2020 Profile of Home Buyers and Sellers," Page 8. Accessed June 16, 2021.

4. Consumer Financial Protection Bureau. "How to Decide How Much to Spend on Your Down Payment." Accessed June 16, 2021.

5. Zillow. "San Diego Home Prices & Values." Accessed June 16, 2021.

6. Zillow. "Omaha Home Prices & Values." Accessed June 16, 2021.

7. Experian. "What Is a Good Credit Score?" Accessed June 16, 2021.

8. Consumer Financial Protection Bureau. "7 Factors That Determine Your Mortgage Interest Rate." Accessed June 16, 2021.

9. Quicken Loans. "Mortgage Payments Explained." Accessed June 16, 2021.

10. National Mortgage Professional. "Closing Costs Surge in the First Half of 2021."