Housing prices have increased significantly over the past two years, especially for home buyers. The median home value in the United States has risen 20% in the past year alone, a source says.
As a result, the typical or average monthly mortgage payment for homebuyers has risen sharply. We used current house prices and mortgage data to determine what a “typical” monthly payment would be.
For those buying a home in 2022, that average would be around $2,071.
It’s time to do some “new math” in 2022
In recent weeks, several reports have emerged claiming to show the average monthly mortgage payment in the United States for 2022. But most of these reports used data from the latest “American Housing Survey” created by the US Census Bureau – which is released in 2019.
I probably don’t need to tell you how much the housing market has changed since 2019. In the second half of 2020 and throughout 2021, the United States saw record house price growth. In some of the fastest growing real estate markets, median home values have increased by more than 30% in a single year.
On top of that, we’ve seen a big increase in mortgage rates in 2022. Earlier today, in fact, researchers at Freddie Mac reported that the average rate for a 30-year fixed mortgage has risen to “five percent for the first time in more than a decade.
According to a March 2022 report from the National Association of REALTORS®, “monthly payments [among homeowners] increased by 28% compared to a year ago.
When it comes to the typical or average mortgage payment in the United States, some “new math” is clearly warranted. So let’s go…
Typical mortgage payment for homebuyers in 2022
We used home price data from Zillow, average mortgage rates from Freddie Mac, and the median down payment identified in a 2021 NAR report.
Here are the numbers:
- According to Zillow, the median home value in the United States was around $337,560from spring 2022.
- According to Freddie Mac, the average rate for a 30-year fixed mortgage was 5%in mid-April 2022.
- According to NAR’s “2021 Home Buyers and Sellers Generational Trends Report,” the median down payment among all home buyers was 12%.
We used these numbers with a mortgage calculator (along with insurance and taxes) to get an idea of the average or typical monthly mortgage payment for current homebuyers.
Based on the parameters above, a typical mortgage payment for someone buying a home in 2022 would be approximately $2,071.
Of course, this figure comes from average and median data on house prices, mortgage rates and other housing-related costs. Some homebuyers in 2022 will end up with a much smaller or larger monthly payment, due to a number of variables.
For example, the median home price in San Jose, California is above four times the national median. So a typical homebuyer in this premium housing market would pay significantly more than the average monthly mortgage payment above.
The amount of money deposited, the term of the loan, the borrower’s credit rating, the property tax rate – these and many other factors can influence the amount of a homeowner’s monthly payment. Even so, the figures above give us an idea of the average in 2022.
Different numbers for first-time buyers
The NAR report cited earlier indicates that the median down payment among everything home buyers was 12%. But first-time buyers tend to make smaller down payments, on average, compared to repeat buyers.
There is an obvious reason for this difference. First-time home buyers don’t have the profits from a previous home sale to spend on their next purchase.
According to a January 2022 blog post from the National Association of Realtors:
“However, in reality, the typical down payment for first-time buyers has fluctuated between 6-7% since 2018.”
Using the same house price and mortgage rate data as before, but lowering the initial investment to 6%, the average monthly mortgage payment would be $2,234. This could be a more accurate payment amount for those buying a first home in 2022, with a down payment closer to 6%.
Meanwhile, interest rates continue to climb
Home buying costs continue to climb in 2022. As mentioned earlier, the median home value in the United States has increased by double digits in the last 12 months alone. Mortgage rates have also skyrocketed.
On April 14, mortgage buying company Freddie Mac announced that the average rate on a 30-year fixed mortgage had risen to 5%. This is the highest average for more than ten years, and it could increase further in the coming months.
The April 2022 Freddie Mac Report stated:
“As Americans face historically high inflation, the combination of rising mortgage rates, high home prices and tight inventories makes the pursuit of homeownership the most expensive in a generation.”
With rising home values, mortgage rates, and inflation, it’s no wonder so many Americans can’t afford to buy a home these days. If these trends continue, home ownership could become a luxury reserved for the wealthiest Americans.
Disclaimer: This report estimates the average monthly mortgage payment in the United States among recent home buyers, based on current home prices, interest rates, and other factors. Housing costs can vary due to a number of factors. Therefore, these numbers will not apply to all homebuyers.