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From lenders’ fees, mortgage insurance, and mortgage payments, there are a lot of costs to consider when applying for a mortgage to buy your dream home.
While origination fees and other minor fees are easy to calculate, one of the most critical factors you must consider when purchasing or refinancing a mortgage is whether you can afford the necessary monthly mortgage payments.
The amount you pay for monthly mortgage payments is often determined by the size of your down payment, loan amount, and loan duration.
However, the average monthly mortgage payments may differ across states and areas.
By learning about the average monthly mortgage payment in your location, you can easily plan your home buying budget to avoid running into a roadblock down the road when you actually buy a house.
Understanding Average Monthly Mortgage Payments
In attempting to find the monthly mortgage payments of a particular location, you will need to understand the difference between an average monthly mortgage payment and a median monthly mortgage payment.
While they both offer insights into the monthly mortgage payments of an area, the average monthly mortgage payment is calculated by considering all the monthly mortgage payments on a state-by-state basis, adding them up, and dividing by the number of states.
Averages are sometimes impacted by extremely high or low outliers, making them a less reliable indicator.
For example, let’s say the monthly mortgage payments for California, Texas, North Carolina, and Alaska are: $1450, $1250, $1600, and $1150, respectively.
To find the average, you will need to add up the numbers (which equals $5,450) and divide it by the number of the states. That is $5,450/4, which gives us $1,363 as the average monthly mortgage payments.
The median monthly mortgage payment is calculated by finding the number in the exact middle of all mortgage prices.
This provides a more accurate picture of the typical monthly mortgage payment because it effectively eliminates outliers on the low or high end of the spectrum.
Using the above example, to find the median monthly mortgage payment of the above states, you will arrange the amount in their order of value: $1150, $1250, $1450, $1600.
After that, you will need to pick out the middle number. However, in our example above, we’ll need to add the two middle numbers ($1250 and $1450), which equals ($2700), and divide it by 2, giving us $1350 as the median monthly mortgage payments of the above states.
When it comes to calculating the monthly mortgage payments of states in the U.S., the U.S. Census Board uses median mortgage payments since it represents a broader range of homeowners in any location.
Average Monthly Mortgage Payments in the U.S.
The average monthly mortgage payment for a homeowner in the United States is $1,275 on a 30-year fixed-rate mortgage.
The median monthly mortgage payment is $1,609, according to the most recent data available from the U.S. Census Bureau’s American Housing Survey.
If you’re wondering how we arrived at the median number of $1,609, then let’s look at the recent data made available by the U.S. Census Bureau.
|Monthly Housing Costs||Number of Homeowners|
|Less than $200||27,555|
|$200 to $399||206,552|
|$400 to $599||1.11 million|
|$600 to $799||2.91 million|
|$800 to $999||4.59 million|
|$1,000 to $1,499||13.02 million|
|$1,500 to $1,999||10.15 million|
|$2,000 to $2,499||6.4 million|
|$2,500 to $2,999||3.92 million|
|$2,500 to $2,999||6.28 million|
The Census Bureau postulates that if we are to itemize each mortgage payment (that is, the whole 48 million) from the lowest payment to the highest payment, we will find out that the median mortgage payment in the U.S. is $1,609.
Average Monthly Mortgage Payments (State-by-State)
When evaluating the average and median mortgage payments, one important factor to consider is location.
This is because the price of homes, interest rates, and mortgage insurance premium varies across areas.
While some states have relatively low home values, homes in states like California, Hawaii, and New Jersey have much higher home costs, meaning people pay more for their mortgage each month.
Here’s how all the 50 U.S. states rank up in terms of median mortgage payments:
|State||Median monthly mortgage payment|
Average Monthly Mortgage Payments by Age Group
Studies by mortgage experts have revealed that it is common for Americans in their prime to owe the highest average mortgage debt.
The following stats from the U.S. Census Bureau gives a clearer picture of the average monthly mortgage payments by age group.
|Age||Median Mortgage Payment|
|25 to 29||$950|
|30 to 34||$1,096|
|35 to 44||$1,192|
|45 to 54||$1,100|
|55 to 64||$989|
|65 to 74||$881|
|75 and up||$696|
The above data from the U.S. Census Bureau confirms the statement that Americans in their prime spend more on their mortgage payments.
From age 25 to 64, the monthly payment was over $1,000 or a little shy of the $1,000 mark.
>> More: How to Choose the Best Mortgage
Average Monthly Mortgage Payments by Region
Just like with states, your mortgage payments can vary depending on your region. Below are the median monthly mortgage payments by region in the U.S.
|Region||Median monthly mortgage payment|
While mortgage interest rates may be similar across regions, it is common for mortgage payments to differ.
Regions with lower median income have a lower monthly mortgage payment than regions with higher median income.
In addition, regions with lower median income tend to carry a higher interest rate than wealthier regions.
Average Monthly Mortgage Payment by Income
Just like the average mortgage payment in California differs from that of Utah, this applies to income, as well.
According to the data provided by the U.S. Census Bureau, individuals with high earning power have the highest average house payments per month.
People from this income group, interestingly, don’t have the highest median interest rate.
|Income||Median Mortgage Payment||Median Interest Rate|
|Less than $10,000||$635||4%|
|$10,000 to $19,999||$607||5%|
|$20,000 to $29,999||$631||5%|
|$30,000 to $39,999||$700||5%|
|$40,000 to $49,999||$769||4%|
|$50,000 to $59,999||$850||4%|
|$60,000 to $79,999||$927||4%|
|$80,000 to $99,999||$1,024||4%|
|$100,000 to $119,999||$1,200||4%|
|$120,000 or more||$1,600||4%|
From the above table, it is clear that monthly mortgage payments increase with income.
It is common for high earners or wealthier individuals to buy a more expensive home than low-income earners.
Costs Included in Mortgage Payments
If you’re like most new homeowners, you may not understand the various expenses embedded in your mortgage payments.
Every mortgage payment has four to five pillars: principal, interest, property taxes, homeowners’ insurance, and homeowners’ association fee (optional). Commonly, this is abbreviated as PITI.
Don’t mistake it with your high school principal. Your mortgage principal is the sum you borrowed from your lender to buy your dream home. In a nutshell, it is the amount you are expected to pay back to your lender.
Mortgage principal is calculated by subtracting your down payment from the home selling price.
So, for example, the price of the home you bought was $200k, and you made a 20% down payment. Your mortgage principal will then be $160k.
This makes up the second most important aspect of your mortgage payment. Your interest is the money you pay to your online mortgage lender for taking the risk. Interest rates may be fixed or adjustable.
With a fixed rate, your interest rate stays the same during the life of the loan. On the other hand, adjustable-rate changes over the life of the loan. Nearly 90 percent of outstanding mortgages are fixed rates.
You can’t escape the long arms of Uncle Sam. From the moment you close on your home mortgage until you pay off the loan, you’ll need to pay taxes to your local government.
The tax you pay on your property helps your local government fund the development of various social amenities.
You may be wondering, how do they calculate the property tax of my home? Generally, they will send a property assessor to appraise the value of your home, then use the findings to arrive at a specific tax rate.
Once you approach a mortgage lender for a mortgage to buy a home, you’ll need to get homeowners’ insurance.
Most mortgage lenders will not approve your loan request without proof of your homeowners’ insurance.
Your homeowners’ insurance insures your home and belongings in the event of damage, theft, and other unforeseen circumstances.
Homeowners Association fee (HOA)
If your home is situated in an HOA community, you may have to deal with residential rules and fees.
This is usually common with gated communities, condominiums, and multi-family apartment buildings.
The fees you pay monthly or annually for living in an HOA community go toward the community’s development, maintenance, and security.
Average Monthly Mortgage Payment
Going by the above example, you bought a house for $200,000 with a 20% down payment ($40k).
In this situation, your principal is $160,000. Let’s say your lender hooks you up with a fixed interest rate of 3.85% on a 15-year mortgage. You’d pay around $1,171 a month—that’s principal and interest.
But wait. You still have to deal with insurance, property taxes, and even HOA fees. So, let’s say you get a homeowners’ insurance deal for $80 per month.
Then, your local government charges you $1150 a year for property taxes or $96 per month. Now you have to pay HOA fees of $50 per month.
|Principal & Interest||Tax||Insurance||HOA Fee||Total Monthly Mortgage Payment|
Add the above together, and there you have your monthly mortgage payments.
Bottom Line: Average Monthly Mortgage Payment
While it is common for your down payment, interest rate, and loan term to play a more significant role in influencing your average mortgage payment, other factors like your location, credit score, and income may impact the mortgage rate you receive from your lender.
In this article, we have looked at how to calculate your median mortgage payments across the 50 U.S. states and the various costs that impact your mortgage payments.