Average Mortgage Payment By State 2025 [Median & Average]
Are you considering buying a home? Understanding the average mortgage payment can provide an informative starting point.
You're certainly not alone - countless Americans navigate this process each year. But let's face it: calculating how much your prospective mortgage payment might be can feel like walking through a maze. The good news? It doesn't have to be overwhelming.
Think of this as your handy guide to better understand what's involved in your average mortgage payment and how it fits into your financial picture.
It's time you took control of your home-buying journey by crunching the numbers. Knowledge is power, even more so when making significant decisions about your future home.
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What Is The Average Mortgage Payment In The U.S.?
The average mortgage payment in the U.S. is approximately $1,768. This figure is determined by combining the middle principal and interest payment, which is $1,275, with the average homeowner's insurance, about $88, and the average property tax payment, approximately $405.
It's important to note that these are national averages, and actual costs may vary significantly depending on each individual's situation and location.
How To Calculate Average Monthly Mortgage Payment
You need to understand what goes into the calculation to get a handle on your prospective monthly mortgage payment.
Your monthly mortgage payment, often referred to as "M" in the financial world, can be found using a slightly complex formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
In this equation,
- 'M' is your monthly mortgage payment.
- 'P' is the principal loan amount.
- 'i' is your monthly interest rate. The annual interest rate is divided by 12 months.
- 'n' is the number of payments over the life of the loan (like 360 payments for a 30-year loan).
So, to calculate your average monthly mortgage payment, fill in these variables. The result of this equation will give you only part of your overall payment — specifically Principal and Interest ('PI').
Remember that your total monthly mortgage payment includes more than just PI. Property Taxes and Homeowner's Insurance are two additional features that contribute to your monthly income.
What Impacts a Monthly Mortgage Payment?
Your monthly mortgage payment consists of several components, each with its specific impact on the total amount.
The primary elements are principal, interest, taxes, insurance, and Homeowners Association (HOA) fees.
Principal
The principal is the amount you borrowed to buy your home. It forms a significant part of your loan payment.
As time passes and you make regular payments, more of your monthly payment goes towards paying off the principal.
Most of your payment is applied to the interest early in the loan term. However, as you continue to make payments over the years, a larger portion goes toward reducing the principal balance–thus building home equity.
The higher your loan amount (or principal), the higher your monthly mortgage payments will be.
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Interest
Interest is essentially what you pay for borrowing money from a lender, typically expressed as an annual percentage of the loan. This charge often constitutes a substantial part of your early mortgage payments.
Over time though, as you gradually repay more principal - hence lowering that outstanding balance - what remains exposed to interest becomes reduced, which implies lower subsequent interest payments.
Taxes
Property taxes are another essential element that influences your average monthly mortgage payment.
These are local taxes levied by counties or municipalities based on the assessed value of your property.
The tax rates vary widely across different parts of the country; hence, consulting with local tax authorities or conducting detailed research on typical rates in a specific area before finalizing your housing budget is crucial.
Insurance
Homeowner’s insurance protects against certain types of damage to your property and is usually required by lenders before they approve a mortgage loan application.
Like property taxes, insurance costs vary widely depending on geographic location and features specific to each home, such as potential risks or protective factors like security systems.
Additionally – keep in mind that should you put down less than 20% down payment, then expect lenders to require private mortgage insurance (PMI) until such point at which you acquire at least 20% equity in the house, thus raising financing costs even further.
Homeowners Association (HOA)
If purchasing a condominium or other type of property within community settings like planned neighborhoods, you’ll probably owe homeowners association fees (HOAs).
These fees cover shared expenses like common areas maintenance and amenities' upkeep ranging from swimming pools to golf courses or clubhouses, for instance - even security may sometimes fall under this umbrella.
The elements above are key drivers behind how much you will end up paying each month for your new home so it's vitally important that prospective homeowners clearly understand every aspect before making any commitment decisions, ensuring they find comfortable & sustainable financing solutions best suited for their particular circumstances.
Median Vs Average Mortgage Payment
Understanding the difference between median and average mortgage payments can help you paint a more accurate picture of what you might expect to pay for your mortgage. Let's break it down.
Median Mortgage Payment
The median is the middle value in a series of numbers between the highest and lowest figures. So, when we speak of median mortgage payments, we're looking at the value that falls directly in the middle of all mortgage payments in a given region.
The advantage to using median figures rather than averages is that it isn't swayed by values at the extremes - meaning they won't be pulled up by a handful of extremely high payments or down by exceptionally low ones.
Average Mortgage Payment
Conversely, an average is calculated by adding all numbers in a set and dividing by how many numbers are present.
Therefore, an average mortgage payment refers to arithmetically taking all data points into account - both high and low payments.
This distinction is important because outliers can heavily influence averages. For example, high-value homes in luxurious neighborhoods can inflate the average mortgage payment above most homeowners pay.
Having both figures at hand —the average and median—paints a clearer picture. Each provides distinct insights about expected expenses, helping you navigate your way toward homeownership more knowledgeably.
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States with the Highest Monthly Mortgage Payments
Understanding where the highest monthly mortgage payments exist could impact your decision about where to plant your roots. Let's delve into which states top the list when paying a premium for calling a place home.
Hawaii
The tropical paradise of Hawaii leads the pack, with a median monthly mortgage payment of $2,350. The Aloha State's high real estate prices correlate directly with these massive payments.
Yes, you're paying for the unbeatable weather and breathtaking scenery, but remember that this can be quite a financial undertaking. Consider this carefully if you dream of sipping Mai Tais on your ocean-view veranda.
California
Known for its golden coastline and endless summer, California stands second in line with a median monthly mortgage payment of $2,282.
With Silicon Valley's tech boom and Hollywood's glitz and glamour fueling skyrocketing housing costs, the high number shouldn't surprise.
Remember that California is vast — while cities like San Francisco and Los Angeles have sky-high housing costs, inland regions could provide more reasonable rates.
Massachusetts
Coming in third is Massachusetts, with an average monthly payment of $2,165. Known for its rich history and prestigious educational institutions like Harvard University and MIT, Massachusetts offers robust job markets — particularly in education, healthcare, finance, and technology.
While Boston dominates expensive real estate listings, driving up average costs statewide, more affordable areas are outside the city center.
Suppose you compare these figures to the national average mortgage payout ($1,768). In that case, you'd notice these states register significantly higher on the charts—a noteworthy point to consider if contemplating a move to any of these states.
States with the Lowest Monthly Mortgage Payments
Look no further if you're trying to find a home in a state with the lowest average monthly mortgage payments.
West Virginia, Kentucky, and Mississippi offer some of the country's most budget-friendly median mortgage payments.
1. West Virginia
Known for its breathtaking Appalachian mountains and rich history in coal mining, West Virginia has quite an attractive real estate market.
The median monthly mortgage payment here is just $1,023. This figure makes West Virginia an excellent, affordable place without compromising quality or location.
Coming in very affordable compared to other states, housing prices lean significantly lower than the national average.
2. Kentucky
Next up is Kentucky – renowned for bourbon distilleries, horse racing, and even boasting some of the nicest weather around certain periods of the year.
A state where beautiful landscapes meet great living expenses – with a median monthly mortgage payment of $1,158.
Lower property taxes also contribute to affordability in Kentucky - an advantageous factor that only serves to sweeten up an already appealing deal.
3. Mississippi
Last but certainly not least is Mississippi, which has a median monthly mortgage payment of only $1,134.
The Magnolia state is known for its cultural heritage, including great music and food scenes that locals passionately cherish.
Mississippi may have low costs, but it does not compromise on comfort or conveniences - making it a promising choice for homebuyers seeking economical solutions without missing out on rich experiences.
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Average Mortgage Payment by State
Understanding the average mortgage payment by state can offer valuable insights to potential home buyers.
This comprehensive list provides an overview of median monthly payments and average mortgage balances across all fifty states in America.
| State | Median Monthly Payment | Average Mortgage Balance |
| Alabama | $1,148 | $144,282 |
| Alaska | $1,907 | $227,960 |
| Arizona | $1,395 | $210,872 |
| Arkansas | $1,071 | $132,973 |
| California | $2,282 | $371,982 |
| Colorado | $1,681 | $273,718 |
| Connecticut | $2,096 | $224,336 |
| Delaware | $1,563 | $190,846 |
| Florida | $1,466 | $195,549 |
| Georgia | $1,383 | $180,379 |
| Hawaii | $2,350 | $348,637 |
| Idaho | $1,229 | $185,322 |
| Illinois | $1,668 | $177,055 |
| Indiana | $1,130 | $124,454 |
| Iowa | $1,234 | $135,112 |
| Kansas | $1,349 | $141,610 |
| Kentucky | $1,157 | $129,469 |
| Louisiana | $1,267 | $154,713 |
| Maine | $1,381 | $140,904 |
| Maryland | $1,987 | $253,598 |
| Massachusetts | $2,165 | $261,345 |
| Michigan | $1,279 | $135,842 |
| Minnesota | $1,547 | $180,766 |
| Mississippi | $1,135 | $123,062 |
| Missouri | $1,254 | $143,545 |
| Montana | $1,386 | $189,022 |
| Nebraska | $1,352 | $144,299 |
| Nevada | $1,469 | $239,477 |
| New Hampshire | $1,917 | $184,468 |
| New Jersey | $2,431 | $241,772 |
| New Mexico | $1,262 | $163,384 |
| New York | $2,114 | $240,792 |
| North Carolina | $1,292 | $165,636 |
| North Dakota | $1,389 | $167,883 |
| Ohio | $1,269 | $125,250 |
| Oklahoma | $1,214 | $138,753 |
| Oregon | $1,647 | $236,604 |
| Pennsylvania | $1,476 | $147,148 |
| Rhode Island | $1,838 | $189,946 |
| South Carolina | $1,227 | $165,649 |
| South Dakota | $1,298 | $158,728 |
| Tennessee | $1,224 | $165,262 |
| Texas | $1,549 | $186,696 |
| Utah | $1,497 | $230,545 |
| Vermont | $1,592 | $151,884 |
| Virginia | $1,767 | $245,054 |
| Washington | $1,826 | $278,853 |
| West Virginia | $1,023 | $112,912 |
| Wisconsin | $1,418 | $143,979 |
| Wyoming | $1,428 | $191,541 |
This list illustrates the vast differences in home affordability nationwide and underlines the importance of examining.
FAQs About average mortgage payment
What is the current trend hitting average mortgage payments?
The average mortgage payment has seen an upward trend due to the persistent rise in home prices across the U.S.
Are taxes included in my mortgage payments?
Your monthly mortgage payment often encompasses principal, interest, taxes, and insurance (PITI).
How can I reduce my mortgage payments?
You may reduce your mortgage payments by refinancing for a lower interest rate or extending the loan term.
Does my credit score affect my monthly mortgage payment?
Yes, a higher credit score can help you secure a lower interest rate, which could result in a smaller monthly payment.
Do larger down payments influence the average mortgage payment?
Indeed, making a larger down payment reduces the amount you'll have to borrow, thus potentially lowering your ongoing monthly payments.
Conclusion
Understanding the factors that determine your average mortgage payment can put you on the road to making informed decisions about your home purchase.
Equip yourself with knowledge about principal, interest, taxes, insurance, and factors specific to your location to budget correctly for your dream home.
Buying a home is not just about making ends meet today—it's also about ensuring you can comfortably afford your home now and in the future.
As arduous as the process may seem, being a well-informed buyer is worth every cent in the long run.
Michael Restiano
I support product content strategy for Salt Money. Additionally, I’m helping develop content strategy and processes to deliver quality work for our readers.