Here’s The Average American’s Mortgage Payment. How Do You Compare?

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Comparing your mortgage payment to others may seem pointless, but it can help you gauge where you stand. Read on to learn more. [[{“value”:”

For most Americans, debt is a constant reality, and fighting for a piece of the American Dream is a difficult achievement indeed. So, how do you know if you’ve made it? One way to track how you’re doing is to gauge yourself against everybody else. Although I don’t generally approve of trying to keep up with the Joneses, it can be helpful to at least know what the average member of the Jones family is up to and where you are in comparison.

The median home sales price in Q2 2024 is $412,300, according to the Federal Reserve Bank of St. Louis — up almost $100,000 since Q2 2019 when it was $322,500. So it’s definitely not unusual to wonder just where your mortgage stands, especially with mortgage rates so much higher than in years past.

Why mortgage debt matters

Americans have tons of consumer debt — the total stood at $17.796 trillion as of Q2 2024 (an all-time high). That’s about $104,000 per person. So, you’d think it wouldn’t really matter too much if that debt was credit card or car payments or mortgages. But mortgages are a different beast from all the rest because of both how long they last and how vital they are to household security.

That’s probably why mortgages currently make up 70% of all household debt. Over three quarters of Americans still believe that owning a home is a vital part of the American dream, even though 47% of non-homeowners cite affordability as the main reason they don’t own a home.

A home isn’t simply an investment (though many would argue that it is); it’s a way to create a financial foundation. It’s a place to launch the rest of your financial life. And, most importantly, it’s a way to even out rising housing costs, especially if you have a fixed-rate mortgage.

That’s why even people who often won’t use a credit card or borrow a personal loan will take out a mortgage. For them, it can be a financial badge of honor.

What is the average mortgage payment?

Keeping in mind that the median price of a home sold in Q2 2024 was $412,300, it’s actually pretty amazing to learn that the average mortgage payment was just $1,427 as of 2021. Once the data is updated, we may discover that when 7% mortgage interest rates kicked in, that payment grew alarmingly. But since the average mortgage debt in 2023 was just $244,498, maybe not.

If you plug that debt figure into a mortgage calculator and set it to a 7% interest rate on a 30-year fixed-rate mortgage, the principal and interest portion of the payment is just $1,626.65. It’s not exactly nothing, but compared to the average rent for an apartment at $1,536 per month, it’s not really bad at all.

How to lower your mortgage payment

Now that you know how your mortgage payment compares to others, you’re either thinking that it’s way too high or that you got off lucky. If you’re the former, let’s talk about how to lower that payment.

You can sell your home

I know this is grim, but according to a recent survey, the biggest regret of home buyers is that their home is more expensive overall than they expected. The market is still very healthy in most locations, so if you need to sell and buy something newer, smaller, or in a different location to lower your costs, now is the time.

You can refinance

If you speak to your lender about a mortgage refinance, you may find that you’re already qualified for one. Many loan types only need you to make six months of payments before a simple refinance is possible. If rates are considerably better than they were when you bought, or you have significant equity in the home, you may be able to refinance for a better rate or at least lose your mortgage insurance costs.

You can shop around for your homeowners insurance

Unfortunately, many people, including myself, are getting absolutely walloped by the price of homeowners insurance. If your payments are escrowed, any rise in the cost of insurance will also be a rise in your mortgage payment, which can be hard to deal with if you were already cutting it close. Shop around for insurance and see if you can find a better rate with another company.

How you compare to the average may not really matter

It’s fun to see where we are financially against benchmarks like national averages, but the truth is that the average American doesn’t really exist. America is wildly diverse, as are the hundreds of real estate markets within it. So if you live in a low-cost-of-living area, don’t get too excited that your payment is well below average. And don’t be too upset if you’re in Manhattan and your mortgage is sky high, relatively speaking.

If you’re able to save for retirement, can cover an emergency with your savings account, and you’re paying your bills every month, you’re doing great. It’s only when you can’t do those things that maybe you should consider where you can cut costs, like adjusting how much you spend on housing, if possible.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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