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Home Buying

What’s the Average Monthly Mortgage Payment?

What’s the Average Monthly Mortgage Payment?

7 Minute Read

Are you trying to decide if you can afford a mortgage? Or are you already on the hunt for the perfect home? Either way, if you know what the average monthly mortgage payment is, it might help put your own home purchase into perspective. 

How much is the average American paying per month for their mortgage? Let’s break it down and find out how much home sweet home really costs. 

What’s the Average Monthly Mortgage Payment?

We don’t want to waste your time, so let’s get down to business. The median monthly mortgage payment is just over $1,500, according to the U.S. Census Bureau.(1) That can vary of course, based on the size of the house and where you live, but that’s the ballpark number. 

If you’re the kind of person who doesn’t need to know how we came up with the number $1,500, feel free to skip to the next section. But if you want more details—including how to calculate your own average payment—read on! 

How’s that average calculated?

The first thing to keep in mind is that the U.S. Census Bureau reports the median monthly mortgage, which technically isn’t the same as the average (mathematicians in the audience are nodding their heads enthusiastically).

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To find the median, you order the numbers you have from least to greatest and take the number in the middle:

$500, $1,300, $1,450, $1,500, $1,600, $1,700, $4,600

Now, if you average these numbers, you get $2,064. Is that a fair representation? Definitely not—nearly every number is below $2,064 by a lot. 

But if you look at the median, which is $1,500, you can see it’s more accurate, isn’t it?

Oh yeah it is. That’s why we take the median—so homeowners with multimillion-dollar mansions or cheaper-than-cheap houses can’t skew the final average.

With that in mind, let’s take a quick look at the Census Bureau’s data.

Monthly Housing Cost(2)

Number of Homeowners

Less than $200

20,715

$200 to $399

234,950

$400 to $599

1,336,613

$600 to $799

3,382,020

$800 to $999

5,161,131

$1,000 to $1,499

13,655,590

$1,500 to $1,999

9,752,383

$2,000 to $2,499

5,869,227

$2,500 to $2,999

3,525,455

$3,000 or more

5,230,159

Median

$1,513

 

Basically, the U.S. Census Bureau claims that if you were to list every monthly payment (all 39 million of them) from smallest to largest, you'd find that the one in the middle is $1,513.

What’s the monthly mortgage payment based on region? 

The median monthly payment we gave you was a national stat. But what’s the typical payment in your neck of the woods? 

Region(3)

Median Monthly Mortgage

Northeast

$1,200

South

$890

Midwest

$840

West

$1,243

 

As you can see, you’ll pay a higher mortgage per month living out West or in the Northeast. But don’t start packing your bags yet! You won’t necessarily save a ton of money if you move down South or to the Midwest, since wages are generally lower there. If you found a good-paying job, though, you might be able to pay off your mortgage faster and save money in the process. 

How does the monthly mortgage change by generation?

Who spends the most per month? Gen Xers have the highest median monthly payment, but that’s because they’re buying the most expensive houses. Millennials have the second highest median, not because they’re buying more expensive houses, but because they’re putting down smaller down payments.

Generation(3)

Median Home Purchase

Median % of Down Payment

Median Monthly Mortgage

Millennial

$220,000

7%

$1,871

Generation X

$266,000

9%

$2,206

Baby Boomer

$244,200

19.5%

$1,739

Silent Generation

$228,600

17%

$1,763

 

Look at those baby boomers go! The majority of them put down almost 20%. That’s a generation to look up to for sure. 

How does it change by the price of a home? 

Once you know how much home you can afford, you can easily calculate your monthly mortgage payment. To give you an idea, we’ve listed a range based on a 15-year fixed-rate mortgage. But you can always figure it out yourself with our mortgage calculator.

Price of Home

10% Down Payment

20% Down Payment

$150,000

$1,263

$1,096

$175,000

$1,462

$1,266

$200,000

$1,706

$1,437

$225,000

$1,859

$1,608

$250,000

$2,058

$1,779

$275,000

$2,256

$1,950

$300,000

$2,456

$2,121

 

What’s Included in a Monthly Mortgage Payment?

We’ll give you a hint: It’s not just your mortgage balance. Every mortgage payment has four legs: principal, interest, property taxes, and homeowner’s insurance. 

What’s the principal?

This principal is not your pal. It’s the sum you borrow from your lender. It’s the amount you’re expected to pay back. Unless you take out a ridiculous interest-only mortgage (which forces you to waste a ton of money paying only interest and no principal), you’ll pay down the principal every month—little by little by little. 

Interest?

Your lender has to make money too, you know, and that’s what interest is designed to do. Every month, your lender gets a piece of the pie—based on a percentage of the amount you borrowed. But hey, there are no surprises (on a mortgage, that is). Your lender will set your interest rate at the beginning of your loan term, and as long as you get a fixed-rate mortgage, you’ll pay that same interest rate for the life of the loan. 

How about property taxes? 

You can’t escape taxes—period. From the moment you buy a house, until, well, forever, the government makes you pay property taxes. How does Uncle Sam calculate these taxes? He’ll send a property assessor to find out how much your house is worth, then he’ll use that number to figure out how much you owe him. 

You mean, there’s insurance too? 

Yep. Once you buy a house, you’ll need to get homeowner’s insurance. It may not be the most exciting housewarming gift, but you absolutely must have it. Talk to an insurance agent to make sure you’re getting the right amount of coverage for the right price. 

What do these look like altogether?

Let’s say you buy a gorgeous $200,000 house on a 20% down payment ($40,000). In this scenario, you’d have to borrow $160,000. On a 15-year mortgage with a fixed interest rate of 4%, you’d pay around $1,184 a month—that’s principal and interest. 

But wait. There’s still tax and insurance. So let’s say one of our ELP insurance agents hooked you up with a sweet deal and got you homeowner’s insurance for $75 a month. Then let’s say your local government charges you $1,407 a year for property taxes (about a .7% tax rate) or $117 per month. Add all these numbers together, and you have your monthly mortgage.

Principal + Interest

   Tax  

 Insurance 

Complete Monthly Mortgage Payment

$1,184

$117

$75

$1,376

 

How Much Monthly Mortgage Payment Can You Afford?

We’ve looked at the median monthly mortgage payments, and you’ve even learned how one is calculated. But now the big question remains: How much mortgage can you afford?

Once you’ve set a ballpark housing budget, give Churchill Mortgage a call. Not only will they help you get a mortgage the smart way (avoiding all the dumb options that keep you in debt forever), but they’ll pay close attention to your budget and make sure you can actually afford it. They’re real friendly folks. Get started with one of their loan specialists today!If you’re asking yourself this question, don’t sit around twiddling your thumbs. Get answers from a trustworthy lender now