How Does Your Mortgage Payment Compare to Your Fellow Americans?

If you own a house, or are thinking of buying a house, you may be wondering what your mortgage payment will look like, or what a reasonable mortgage payment is. Looking at what your fellow Americans are paying can help you gain some perspective.

So, how much are people paying monthly for their home loans? Here's the typical mortgage payment for a U.S. home buyer right now.

This is how much U.S. home buyers are paying for their home each month

In August 2023, the typical monthly mortgage payment for home buyers was $2,866, according to Redfin.

This is the highest average monthly mortgage payment on record. It's 20% higher than the typical monthly payment for a first-time buyer just a year prior, when payments averaged $2,395. And it's almost double the typical monthly mortgage payment of $1,581 that new home buyers paid during August 2020, when the COVID-19 pandemic sent mortgage rates plummeting.

The monthly mortgage payment that home buyers are faced with right now is high because homes remain very expensive to buy and mortgage rates remain higher than most home buyers have dealt with in recent years up until the last few months.

A limited supply of houses has driven the median price of properties up to $420,000 while mortgage rates have been hovering around 7% or even higher compared to below 3% during the pandemic -- and compared to around 3% to 5% where they've hovered since after the 2008 financial crisis.

More expensive homes plus more expensive loans is a recipe for a really high payment.

How to decide if a monthly mortgage payment is affordable for you

Writing a check for $2,866 per month to a mortgage lender is not something everyone can or should do. In fact, that's too high a price for many people to pay.

Home buyers, in general, should not spend more than 30% of their income on housing costs, and that includes not just a mortgage payment but also taxes, insurance, and HOA fees. If you spend much more than that amount, you'd be classified as "house poor" and could end up devoting so much of your income to your mortgage that you can't afford to save for retirement or other goals -- or even to buy furniture for that house you're paying so much to live in.

If you're shopping for a home, look at the total costs you're going to incur to see if you'll be above this number. You can get mortgage quotes online to see what your principal and interest payment will be, and look at property records to see what your taxes and HOA dues will cost you. You can even get homeowners insurance quotes to find out if you'll get stuck paying a lot to insure the property once you own it.

If you find that you can't afford what most people are paying -- or that you can't afford the amount you'd need to spend to get a home in your area -- you should put off buying until you're in a better financial position. Otherwise, you could regret your choice as you struggle to make your mortgage payment every month.