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7 min read Feb 16, 2024

Average Mortgage Payment: Everything You Need to Know (2024 Updates)

Buying a house is an exciting milestone but can get overwhelming. Especially, figuring out your monthly expenses. Which will include HOA fees, escrow fees, insurance and taxes, and Mortgage payments.

An average monthly mortgage payment is the amount of money you’ll need to pay each month to your lender. Usually, there are 15, 30, or 40-year mortgages.

In this blog, we will look at the various components of your average mortgage payment and how much it will cost you!

🚀 Key Takeaways

  • Average Mortgage Payment 2023: The typical average mortgage payment for homeowners hit an all-time high of $2,563 in March of this year.
  • How Much Home can you Afford: With today’s average rates a homeowner with $2,500 monthly budget can comfortably afford a mortage of $376,000.
  • Current Average Interest Rate for a 30-year Fixed Mortgage: Average Mortage rates as of June. 15,2023 is 7.06%.
  • How Much Downpayment Will You Need: As a thumbrule consider putting a 20% downpayment on your mortgage to lower your monthly payment plan.

What’s an Average Mortgage Payment?

The average amount of money you pay each month for your mortgage can be different for everyone. It depends on a few things like the mortgage amount, the interest rate, the mortgage term, and location.

Other things that can affect the average payment include:

  • Downpayment
  • Private mortgage insurance (PMI)
  • Property taxes and homeowners insurance

According to the U.S. Census Bureau, the median monthly mortgage amount is $1,600 for 2023. However, the median and average mortgage costs are not the same!

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Understanding Median Vs. Average Mortgage Payment

Understanding the difference between the median and average home mortgage costs can help you see the range of payments that homeowners make.

  • Median Mortgage Payment: The median mortgage payment is the middle point when you line up all the payments from lowest to highest. It shows what the typical homeowner pays because it ignores any extremely high or low payments.
  • Average Mortgage Payment: To calculate the average monthly loan payment, start by adding up all the payments and dividing by the number of homeowners. This will give you an overall average, but it can also be considered high or low payments. So, it might not show what most homeowners pay.

Here is an example:

Let’s consider five homeowners with monthly mortgage payments: $800, $900, $1,200, $1,500, and $10,000.

The median mortgage payment would be $1,200 because it’s the middle value when you arrange them in order. It represents what most homeowners pay.

The average mortgage payment would be $2,680 because you add up all the payments and divide by 5. It’s higher than the median because the high payment of $10,000 affects the average.

It’s important to know if it’s the median or the average because they can show different things about the range of payments.

What’s the Average Monthly Mortgage Payment in the US?

There is no official government data related to average U.S. mortgage payments. You may consider the average home price of $440,300, and subtract a 12% downpayment. This leaves you with $387,464 (consider this the mortgage amount).

If you spread it over 30 years and divide it by 12, the average monthly mortgage payment will amount to approx $1076. However, this does not include HOA fees, property tax, PMI, etc.

State-By-State Average Mortgage Payments

StateMedian Mortgage Payment
Alabama$1,147
Alaska$1,907
Arizona$1,394
Arkansas$1,071
California$2,282
Colorado$1,681
Connecticut$2,096
Delaware$1,563
Florida$1,466
Georgia$1,383
Hawaii$2,350
Idaho$1,228
Illinois$1,668
Indiana$1,130
Iowa$1,234
Kansas$1,349
Kentucky$1,158
Louisiana$1,267
Maine$1,381
Maryland$1,987
Massachusetts$2,165
Michigan$1,279
Minnesota$1,547
Mississippi$1,134
Missouri$1,254
Montana$1,386
Nebraska$1,352
Nevada$1,469
New Hampshire$1,917
New Jersey$2,439
New Mexico$1,262
New York$2,114
North Carolina$1,290
North Dakota$1,389
Ohio$1,269
Oklahoma$1,214
Oregon$1,647
Pennsylvania$1,474
Rhode Island$1,838
South Carolina$1,227
South Dakota$1,298
Tennessee$1,224
Texas$1,549
Utah$1,497
Vermont$1,594
Virginia$1,767
Washington$1,826
West Virginia$1,023
Wisconsin$1,418
Wyoming$1,428

Source: RocketMortgage

How much is an average mortgage payment per month

A mortgage payment consists of different parts that together determine how much you pay each month. Let’s break it down:

  • Principal: A portion of your payment goes towards repaying the money you borrowed to buy the house. This reduces the amount you owe over time with regular monthly payments.
  • Interest: When you borrow money, the lender charges interest as a fee for using their funds. This interest is added to your payment. Initially, a larger portion of your payment covers the interest, but it decreases over time.
  • Escrow: Some mortgage payments include an escrow account. This account holds money for property taxes and homeowners insurance. Each month, a portion of your payment goes into the escrow account to cover these expenses.
  • Property Tax: Local governments impose property tax or fees based on the value of your property. You can pay this through your escrow account.
  • Private Mortgage Insurance: Borrowers who pay less than 20% as a downpayment may require a PMI. This insurance protects the lender in case of defaults. The cost of PMI is typically included in your mortgage payment until you build enough equity in the house.

    Remember, the specific parts of your mortgage repayment can vary based on your loan terms and agreements with your lender.

What is Mortgage Amortization?

Mortgage amortization is when a borrower repays their loan gradually through regular monthly payments.

Each payment includes both principal (the borrowed amount) and interest (the borrowing cost), with the division changing over time. Regular payments reduce the loan balance and by the end of the amortization period, your loan is over.

» Download and edit the free amortization schedule Excel template below

»Also Read: 15 vs. 30-Year Mortgage: Find Out What’s Best For You

How to Calculate Average Monthly Mortgage Payments?

To calculate the average monthly house payment, follow these steps:

  • Collect Loan Information: Gather the details of your mortgage loan, such as the loan amount, interest rate, and loan term (the number of years you have to repay the loan).
  • Determine Payment Frequency: Decide how often you make mortgage payments, such as monthly or biweekly. For simplicity, let’s assume monthly payments in this example.
  • Use a Mortgage Payment Formula: Instead of using complex formulas, it’s easier to use online mortgage calculators or spreadsheets with built-in mortgage functions. Many financial websites and mortgage lenders offer online calculators that allow you to input your loan details and calculate your monthly payment.
  • Input Loan Details: Enter the loan amount, interest rate, and loan term into the calculator or spreadsheet. Add property taxes and homeowners insurance to the calculator.
  • Calculate the Monthly Payment: Once you’ve entered all the necessary information, the calculator or spreadsheet will provide you with the average monthly mortgage payment.

Bottom Line

Understanding the difference between average and median mortgage payments is crucial. While the average gives a general overview, it can be influenced by extreme values, which may distort the overall picture. On the other hand, the median provides a more reliable representation of what most homeowners pay.

By knowing your average mortgage payment, you can effectively budget, assess affordability, and confidently plan your financial future. Use online mortgage calculators to estimate your monthly payment based on factors like your income, credit score, and the average down payment on a house.

You can also work with a mortgage lender to get pre-approved for a loan. This will give you a better sense of your budget and help you make a more competitive offer!

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Frequently Asked Questions

1. What is the monthly payment on a $600,000 mortgage?

If you consider an interest rate of 7% you will pay around $3,992. However, its important to understand the various parts of your monthly mortgage payment. These can include escrow fees, HOA fees, tax and insurance.

2. What's the average monthly payment for a house in America?

Your average monthly payment will depend on various factors - size of loan, mortgage term, and how much down payment you put up. Homeowners spend around $1,100 per month in 2023.

3. What is the average monthly cost of mortgage in 2023?

The median home sales price in 2023 is $436,800. If you subtract a 20% down payment on this amount you get, $349,440. For a mortgage term of 30 years you need to pay $970.66 per month to your mortgage lender. However, you must include other monthly expenses such as HOA fees, tax and insurance, and any special assessments.

4. What's the average mortgage payment with taxes and insurance?

Consider a mortgage of $400,000 at 6% mortgage interest rate for a 30-year fixed period. Your monthly mortgage cost (principal + interest)will be $2,398. Add tax and other fees for $308 and home insurance of $104 which brings your total to $2,811.

5. What is the average home loan amount in 2023?

The average home price rose from $348,079 in 2022 to $436,800 in 2023. The minimum down payment on conventional and FHA loans are around 3% - 3.5%. Considering these figures we may conclude the average home loan amount to be around $420,000 in U.S. right now!

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