Skip to main content
Advertiser Disclosure
We do receive compensation from some partners whose offers appear on this page. We have not reviewed all available products or offers. Compensation may impact the order in which offers appear on page, but our editorial opinions and ratings are not influenced by compensation.

Ascent-logo

  • Credit Cards
  • Banking
  • Brokerages
  • Loans
  • Mortgages
  • Knowledge
  • Latest Picks
  • Search Icon Click here to search

Credit Cards

Top Picks
  • Best of February 2021
  • Cash Back
  • Balance Transfer
  • Travel
  • 0% APR
  • Rewards
  • Bad Credit
Knowledge
  • Beginners Guide to Credit Cards
  • How to Rebuild Your Credit
  • Maximize Your Credit Card Rewards
  • Learn More About Credit Cards
Credit Card Tools
  • Compare Cards
Looking for a new credit card?

Explore the best credit cards in every category as of February 2021.

Get started!

Banking

Top Picks
  • Best Savings Accounts
  • Best Bank Accounts
  • Best Money Market Accounts
  • Best CDs
  • Best Checking Account Bonuses
Knowledge
  • Beginners Guide to Banking
  • Everything You Need to Know About Savings
  • Money Market Accounts Made Easy
  • Learn More About Banking
Looking for a place to park your cash?

Check out our top picks of the best online savings accounts for February 2021.

Get Started!

Brokerages

Top Picks
  • Best Brokers of February 2021
  • Best Online Brokers for Beginners
  • Best Options Brokers
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Robo Advisors
Knowledge
  • How to Open a Brokerage Account
  • Beginner's Guide to Brokerages
  • Learn More About Brokerage
Just getting started?

Explore our picks of the best brokerage accounts for beginners for February 2021.

Get Started!

Loans

Top Picks
  • Best Loans of February 2021
  • Best Personal Loans for Bad Credit
  • Best Loans for Debt Consolidation
  • Best Low-Interest Personal Loans
  • Best Personal Loans for Good Credit
  • Best Personal Loans for Fair Credit
Knowledge
  • Personal Loans Made Easy
  • Debt Consolidation Guide
  • How to Pay Off Debt
  • Learn More About Loans
Thinking about taking out a loan?

Before you apply for a personal loan, here's what you need to know.

Get Started!

Mortgages

Top Picks
  • Best Mortgage Lenders of February 2021
  • Best Mortgage Lenders for Poor Credit
  • Best Refinance Lenders
  • Best VA Mortgage Lenders
Knowledge
  • First Time Homebuyers Guide
  • Home Loans Made Easy
  • The Complete Guide to Refinancing
  • How to Get a Mortgage with Bad Credit
  • Learn More About Mortgages
Tools & Calculators
  • Mortgage Calculator
Compare Rates
  • Today's Mortgage Rates
  • Refinance Rates
  • 15-Year Mortgage Rates
  • 20-Year Mortgage Rates
  • 30-Year Mortgage Rates
  • Jumbo Mortgage Rates
  • VA Loan Rates
  • 5/1 ARM Rates
  • 7/1 ARM Rates
  • FHA Mortgage Rates

Knowledge

Knowledge Section
  • All Articles
  • Credit Card Articles
  • Banking Articles
  • Brokerage Articles
  • Personal Loan Articles
  • Mortgage Articles
  • Personal Finance Articles
Recent Articles
  • Stimulus Check Update: Congress Moves One Step Closer to Another Round of Direct Stimulus Payments

    Personal Finance

    Stimulus Check Update: Congress Moves One Step Closer to Another Round of Direct Stimulus Payments
  • Mortgage Delinquencies Were Down in 2020's Fourth Quarter. Forbearance Could Extend That Trend

    Mortgages

    Mortgage Delinquencies Were Down in 2020's Fourth Quarter. Forbearance Could Extend That Trend
  • 22.6 Million Americans Can Cover Their Bills Through July If They Get a $1,400 Stimulus Check

    Personal Finance

    22.6 Million Americans Can Cover Their Bills Through July If They Get a $1,400 Stimulus Check
  • Current Mortgage Rates for February 24, 2021: Rates Up Again

    Mortgages

    Current Mortgage Rates for February 24, 2021: Rates Up Again
  • The Ascent
  • Knowledge
  • Mortgages

Average Mortgage Amount Hits a Record High

by Maurie Backman | Feb. 3, 2021

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

An upward trending line drawn on a chalkboard with dollar signs under the line.

Image source: Getty Images

Buyers are taking on larger home loans than ever to scoop up homes in today's market.

Low mortgage rates have fueled home buyer demand in recent months. And limited housing inventory has created a terrific situation for sellers -- they're able to command higher asking prices than ever. The result? Buyers have to borrow more money to cover their home purchases. In fact, the average purchase loan amount hit a recent record high of $395,200, according to the Mortgage Bankers Association. But that could mean some buyers are getting in over their heads.

The danger of taking on too high a mortgage

It's easy to see how attractive mortgage rates might push buyers to borrow more than they'd normally be comfortable with. But if you take on too high a mortgage, you'll risk a host of dangerous consequences.

For one thing, you might struggle to pay your mortgage once you realize how much those monthly payments eat into your budget. And if you fall behind on your mortgage payments, you could eventually risk losing your home.

Even if things don't reach that extreme, if you take on too high a mortgage, you could fall behind on other bills. Once that happens, your credit score could take a serious beating, making it difficult for you to borrow money again.

Get $150 off closing costs with Better.com Mortgage

Get $150 off closing costs with Better.com Mortgage

This is one of the top lenders we've used personally to secure big savings. No commissions, no origination fee, low rates. Get a loan estimate instantly and $150 off closing costs.

Learn More

Finally, paying too much for a mortgage could cause you to fall short on other financial goals. Say you start spending so much on a mortgage that you can no longer afford to contribute to a retirement savings plan. You might manage to keep up with your home loan, but you could wind up putting yourself in a very bad spot later in life.

Don't get in over your head

Given the way home prices have risen, many of today's buyers have to choose between taking on a higher mortgage than they'd like or walking away from a home purchase. If you're not sure what to do, use a mortgage calculator to run some numbers and see what monthly payments your home loan will amount to.

For example, say you take out a 30-year, $395,200 loan at 2.819%, which is the average rate as of this writing. That will leave you with a monthly payment of $1,627 in principal and interest. However, that doesn't include other expenses like homeowners insurance and property taxes. You might also face other monthly expenses when you buy a home, like private mortgage insurance, which applies if you don't make a 20% down payment, or homeowners association fees. Plus, you'll need to maintain your home and set aside funds for inevitable repairs.

Seeing what monthly payment your mortgage amount translates to could help you determine whether you can swing it or not. And if you can't afford a home in today's market, you're better off sitting tight and waiting for housing inventory to open up. Once it does, home prices are likely to come down -- and you shouldn't have to borrow as much in order to have a place to call your own.

A historic opportunity to potentially save thousands on your mortgage

Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase. 

Our expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See our full advertiser disclosure here.

About the Author

Maurie Backman
Maurie Backman icon-button-linkedin-2x

Maurie Backman is a personal finance writer who covers everything from savings to retirement to healthcare. Her articles have appeared broadly on major outlets such as CNBC, MSN, and Yahoo.

Share This Page
Facebook Icon This icon shares the page you are on via Facebook
Blue Twitter Icon Share this website with Twitter
LinkedIn Icon This image links to share the page over LinkedIn.
Email Icon Share this website with email
The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

Related Articles

"Rates" on a stick note on a house image for Find the Best Mortgage Rates

Find the Best Mortgage Rates

Cardboard cutout house on a desk image for Best Mortgage Lenders for 2021

Best Mortgage Lenders for 2021

Money bags and a model house sit on a balance beam image for Best Mortgage Refinance Lenders for 2021

Best Mortgage Refinance Lenders for 2021

Change on a desk image for Mortgage Payment Calculator

Mortgage Payment Calculator

Featured Articles

Find the Best Mortgage Rates

Best Mortgage Lenders for 2021

Best Mortgage Refinance Lenders for 2021

Mortgage Payment Calculator


We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Ascent Logo

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

btn_facebook-yellow btn_twitter-yellow btn_instagram-yellow

Copyright © 2018 - 2021 The Ascent. All rights reserved.

About The Ascent
About Us Contact Us Newsroom How We Make Money Editorial Integrity Ratings Methodology
Legal
Terms of Use Privacy Policy Accessibility Policy Terms and Conditions Copyright, Trademark and Patent Information
Learn
Credit Cards Banking Brokerage Loans Recent Articles

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Back to The Motley Fool