If you’re considering becoming a homeowner, your first question is probably about the cost involved. Like rent, a mortgage is your monthly housing payment. However, instead of paying your landlord, you pay your lender what you borrowed to finance the home – plus interest, taxes and insurance.
Despite increased home values and rates, homeownership remains affordable across the country, even in most urban areas. In the earliest stages of buying a home, it can be helpful to get an idea of how much your average mortgage payment will be, based on area averages where you want to buy a home.
What Is The Average Mortgage Payment In The U.S.?
If you’re starting to think about buying a home, you’re probably looking for a ballpark figure for how much you can expect your monthly mortgage payment to be. But the national average monthly mortgage payment can differ significantly from what you’ll encounter depending on your location, home, interest rate and the type of mortgage you choose. This is in addition to your individual creditworthiness and financial situation.
Data from the Council for Community and Economic Research (C2ER)’s 2022 Annual Cost of Living Index shows that the national average monthly mortgage payment is $1,768. This figure differs from the median monthly payment in the U.S., which is $1,532. The median looks at the middle number among the mortgages in the country and is helpful because it ignores the high and low extremes in the mortgage market.
Remember, the national average monthly mortgage payment takes the entire country into account. Monthly payments vary wildly from one state to another and within states as well. For example, major cities have higher mortgage costs than rural areas, as with Chicago versus downstate Illinois. As a result, your local real estate market will determine your mortgage payment more than the national average.
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What’s In an Average Mortgage Payment?
Although you might think of a monthly mortgage payment as being based on paying back the money you borrowed plus interest, it’s a little more complicated. Principal, interest, taxes and insurance (PITI) more accurately represents what goes into your mortgage payment.
- Principal: The principal refers to your mortgage loan balance. Each month, you pay back a portion of what you borrowed to buy your home. Remember, the principal will be lower if you make a larger down payment.
- Interest: Your principal balance accrues interest according to the rate your lender set when they provided the loan (if you have a fixed-rate mortgage). In other words, your lender charges interest as payment for the money they lend you for the mortgage.
- Taxes: Property taxes are local taxes that pay for public services, such as schools and parks. Your lender saves an estimated amount in an escrow account and disburses the money to your local government on your behalf.
- Insurance: Lastly, you pay your homeowners insurance and private mortgage insurance (PMI) premiums, if applicable. You pay mortgage insurance to your lender if you put down less than 20%. Just as it does with taxes, your lender keeps a portion of your payment for insurance premiums in an escrow account to pay on your behalf.
Average Costs, Nationally
Average Inputs | Contribution to Monthly Payments |
|---|---|
Home price | $452,510 |
Interest rate | 4.71% |
Down payment (median) | 13% |
Homeowners insurance | $231 per month |
Annual property taxes | 1.1% of home price |
How To Calculate Average Monthly Mortgage Payment
You can plug your numbers into the following equation: M = P [I(1 + I)^N] / [(1 + I)^N – 1] and add your homeowners insurance and property tax payments to the result.
P stands for the principal, I stands for the monthly interest rate and N stands for the total amount of months (not years) of your mortgage.
Here’s the example using national averages laid out in the next section:
You buy a home for $452,510 and put down 13%, or $58,826.
You borrow $393,683 to purchase the home. Your interest rate is 4.7% with a term of 360 months (30 years).
Using the equation above: M = P [0.3916666(1 + 0.3916666)^360] / [(1 + 0.3916666)^360 – 1]
Before taxes and insurance, your principal and interest payment is: $2,044.
Then, add this number to the homeowners insurance payment of $231 per month ($2,777 per year) and property tax payments of $415 per month ($4,978 per year).
Your total monthly mortgage payment would be about $2,690.
Keep in mind, if you have a conventional loan and your down payment is less than 20% – you’ll also need to add in PMI. This is about 0.1 – 2% of your loan amount on average.
Average Mortgage Payment Where You Live
If you don’t want to do all the math manually, our mortgage calculator will give you an individualized estimate of your monthly mortgage payment. Your ZIP code is a key piece of information because local real estate markets drive the cost of housing in your area.
While a calculator can give you a good starting estimate, it’s best to have an initial approval letter before you start working with a real estate buyer’s agent and looking for a home. Preapproval gives you a better idea of how much house you can afford and a better idea of what your monthly payment would be because the lender reviews your specific finances. Getting preapproved first means you have a lender’s financial backing, indicating your seriousness and financial capability to sellers and real estate agents.
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Average Monthly Mortgage Payment: Highs And Lows By State
When shopping for a mortgage, it’s helpful to know if you are in a state with one of the highest or lowest mortgage payments. The following is a breakdown of the top five in each category. Keep in mind, these estimates are based on principal and interest only and do not include property taxes and insurance.
5 States with Highest Average Mortgage Payment
State | Average Monthly Payment |
|---|---|
California | $3,330 |
Hawaii | $3,222 |
District of Columbia | $2,955 |
Idaho | $2,527 |
Colorado | $2,408 |
5 States With Lowest Average Mortgage Payment
State | Average Monthly Payment |
|---|---|
Kansas | $443 |
Ohio | $889 |
West Virginia | $895 |
Mississippi | $926 |
Michigan | $937 |
Average Monthly Mortgage Payment: Highs And Lows By City
City real estate markets are entities unto themselves, operating independently of nearby markets. Although city living is generally more expensive, the following stand out with the highest and lowest average monthly mortgage payments.
5 Cities With Highest Average Mortgage Payment
City | Average Monthly Payment |
|---|---|
Manhattan, NY | $9,762 |
Honolulu, HI | $5,962 |
San Francisco, CA | $5,786 |
Brooklyn, NY | $5,334 |
Orange County, CA | $4,884 |
5 Cities With Lowest Average Mortgage Payment
City | Average Monthly Payment |
|---|---|
Kalamazoo, MI | $955 |
Charleston, WV | $974 |
Wilkes-Barre, PA | $986 |
Scranton, PA | $992 |
Mobile, AL | $1,001 |
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The Bottom Line: Local Information Is Best for Planning Your Home Buying Budget
Mortgage trends across the country are an aggregate of local real estate market dynamics. As a result, analysis of local data is the best way to plan your future home purchase. For instance, although mortgage costs are generally high in urban areas, your city might have significantly lower mortgage payments due to local factors.
The more accurate your home buying plan, the smoother the process will be. If you’ve examined the mortgage data in your region and are ready to begin your journey toward homeownership, today.
Methodology
The average national mortgage payment, home price and mortgage rate are sourced from the most recent data from the Council for Community and Economic Research (C2ER) 2022 Annual Cost of Living Index (COLI). The median down payment is based on the National Association of Realtors (NAR) 2022 Home Buyers and Sellers Generational Trends Report.
The national average homeowners insurance is from insurance.com and based off a $300,000 liability and dwelling coverage with a $1,000 deductible. The national average for property taxes is from USA Today, March 2020.
To estimate the average mortgage payment for each state, we used the national average down payment (13%) and interest rate (4.71%), along with the average home price for each state that was based on the most recent data from Rocket Homesas of February 2023. These estimates are based on a 30-year mortgage. Taxes and insurance were not included in this calculation. Only principal and interest are included in this estimated monthly payment.
The average monthly mortgage payment per city, including principal and interest only, was also sourced from C2ER COLI, which reviewed 286 urban areas across the U.S.
