Purchasing a home for most Americans is the biggest investment they will ever make in their lifetimes. The average mortgage payment well exceeds that of a vehicle, a single piece of most furniture, and virtually all other items.
In addition, the average monthly mortgage payment by age varies as well. Understanding why people pay depending on their age provides insight into how mortgages work.
Today, the total mortgage debt in the US is estimated to be roughly $10.44 trillion. The monthly installments to repay mortgages will vary because of the following.
- Length of the mortgage
- The price of the property
- Size of the down payment
- Which type of rate was selected
From these factors a monthly mortgage rate can be calculated. A 30-year loan for example is going to have a higher monthly rate compared to a 15-year loan. The cost of the property plays arguably the most prominent role since that will determine the size of the mortgage.
Down Payment: The cost be mitigated by the size of the down payment. The larger the down payment, the smaller the amount that is due, the lower the monthly payments will be.
What is an Average Mortgage Payment?
Mortgages range considerably in terms of their overall costs which not only factors in the price of the home, but whether the rate is a fixed or adjustable one. Most Americans tend to have mortgages with adjustable rates as they can be considerably lower compared to fixed rates depending on the current interest rates.
The average monthly mortgage payment for new applicants as of April 2022 is $1,889 according to the Mortgage Bankers Association. For conventional loan applicants, the rate was higher at $1,967. This represents a significant rise since 2019 when it was $1,487 according to the US Census Bureau.
Average monthly mortgage payments vary considerably based on the state. Some examples include the following.
- Hawaii: $4,901
- Washington DC: $4,105
- California: $3,906
- Wyoming: $1,551
- Georgia: $1,483
- Illinois: $1,296
- Oklahoma: $865
The variations in averages are due to several factors, such as home availability, demand, and the various state and local taxes associated with the mortgage.
Average Monthly Mortgage Payment by Age
When looking at the graph, you can see the average monthly mortgage payment in US based on age. From 25 up to 75 and beyond, the average mortgage payment per household varies considerably.
The lowest are for those at the age of 25, which is $780 per month. And 75 and above who pay just $696 per month. The monthly payments for those 25 years of age are lower because many have yet to purchase a home. While for those at 75 and above many have either never purchased a home or have completed paying off their mortgages.
The highest is for those from 35 to 39 years of age who pay a monthly average of $1192. As you can see from the graph, the monthly mortgage payment peaks at this age and then drops steadily downward. This is because most people who have mortgages are 35 to 39 years old.
With interest rates currently on the rise, most Americans who have adjustable mortgages are going to pay more per month. In fact, the average monthly mortgage payment in US is expected to rise considerably until inflation abates and the Federal Reserve begins to lower the interest rate average.