Images by Getty Images; Illustration by Austin Courregé/Bankrate
Collectively, Americans carry trillions in household debt, with mortgages the biggest burden by far. With home values higher than ever and the U.S. population continuing to grow, the raw total of outstanding mortgages is at record levels.
Still, a mortgage is generally considered “good” debt, and it’s the cheapest way to borrow for many Americans. For those who locked in super-low rates during the pandemic, there’s no real urgency to pay it off, either.
With mortgage rates now in the 7 percent range, however, this type of loan isn’t as attractive to some. What’s more, 49 percent of Americans agree mortgage rates will remain elevated for the foreseeable future, according to an October 2023 Bankrate survey.
Key average mortgage debt insights
Annual average mortgage debt
Mortgage debt is the heavyweight when it comes to household debt, dwarfing credit card balances, student loans and auto loans. Since 2013, mortgage debt has steadily risen. Since the pandemic, increases in home prices and interest rates kicked the climb into overdrive.
Average mortgage debt by generation
Americans generally begin taking on debt as young adults, taper off their pace of borrowing in middle age and work to pay off loans near or during retirement.
| Generation | Average mortgage debt |
|---|
| Source: Experian |
| Generation Z | $229,897 |
| Millennials | $295,689 |
| Generation X | $277,153 |
| Baby boomers | $190,441 |
| Silent Generation | $141,148 |
For each generation, this trend has taken place in tandem with mortgage rate fluctuations and home price appreciation, which has accelerated dramatically in recent years. In February 2012, the median existing-home price was $155,600, according to the National Association of Realtors. By the same time in 2017, the median was $228,200. As of November 2023, the median home price was $387,600.
States with the highest and lowest mortgage debt
These states had the highest average mortgage balance per borrower as of the end of 2022, according to Experian:
- District of Columbia – $492,745
- California – $422,909
- Hawaii – $387,277
- Washington – $331,658
- Colorado – $319,981
In these states, borrowers are much closer to paying off their home loans:
- West Virginia – $124,445
- Mississippi – $139,046
- Ohio – $139,618
- Indiana – $141,238
- Kentucky – $144,222
How mortgage debt compares to other household debt
Mortgage debt makes up the largest portion of household debt, but because the payments are often spread out over decades, they don’t have as outsized an impact on a household’s monthly budget — especially when compared to higher-interest debt like credit card balances.
Here are stats related to other common types of debt, according to the Federal Reserve Bank of New York:
- Auto loans: Total auto loan debt came to $1.6 trillion as of Q3 2023, an increase of $13 billion from the previous quarter.
- Credit card debt: Total credit card debt came to $1.08 trillion as of Q3 2023, an increase of $48 billion from the previous quarter.
- Student loans: Total student loan debt came to $1.6 trillion as of Q3 2023, an increase of $30 billion from the previous quarter.
That longevity works to borrowers’ advantage in another way: Each monthly payment you make builds your home equity, which can be leveraged over time to help further your financial goals.
Additional reporting by Agnes Gaddis
FAQs
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.
What is the 28 36 rule? ›
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.
How to calculate average balance of home acquisition debt? ›
For each mortgage, figure your average balance by adding your monthly closing or average balances and dividing that total by the number of months the home secured by that mortgage was a qualified home during the year. If your lender can give you your average balance for the year, you can use that amount. Example. Ms.
How much mortgage debt is too much? ›
Debt-to-income ratio targets
Meanwhile, any ratio above 43% is considered too high. The biggest piece of your DTI ratio pie is bound to be your monthly mortgage payment. The National Foundation for Credit Counseling recommends that the debt-to-income ratio of your mortgage payment be no more than 28%.
What is the current mortgage debt in the US? ›
Center for Microeconomic Data
Nearly 9 percent of credit card balances and 8 percent of auto loans (annualized) transitioned into delinquency. Mortgage balances shown on consumer credit reports increased by $190 billion during the first quarter of 2024 and stood at $12.44 trillion at the end of March.
What is the 32% rule for mortgages? ›
Lenders prefer you spend 28% or less of your gross monthly income on housing expenses. Ideally, you'd spend 36% or less of your gross monthly income on all debts, but you may qualify with a higher ratio.
What is the average mortgage balance in the United States? ›
The average mortgage debt among Americans is $244,498, per Experian's 2023 State of Credit Report.
Is mortgage interest tax deductible in 2024? ›
Before the TCJA, the mortgage interest deduction limit was on loans up to $1 million. Now, the loan limit is $750,000. For the 2024 tax year, married couples filing jointly, single filers and heads of households can deduct up to $750,000. Married taxpayers filing separately can deduct up to $375,000 each.
Is mortgage debt considered home acquisition debt? ›
Acquisition debt is a financial obligation taken on during the construction, improvement, or purchase of a primary or secondary residence. Thus, a home mortgage loan is an example of acquisition debt. The Internal Revenue Service (IRS) provides certain tax advantages for home acquisition debt.
What is the average mortgage debt per person? ›
These states had the highest average mortgage balance per borrower as of the end of 2022, according to Experian: District of Columbia – $492,745. California – $422,909.
Personal debt can be considered to be unmanageable when the level of required repayments cannot be met through normal income streams. This would usually occur over a sustained period of time, causing overall debt levels to increase to a level beyond which somebody is able to pay.
What is considered a lot of debt when buying a house? ›
Most mortgage lenders want your monthly debts to equal no more than 43% of your gross monthly income.
What's the average mortgage payment in 2024? ›
For FHA loan applicants, the median monthly mortgage payment in March 2024 was $1,898, according to MBA data. Washington D.C. has the highest median monthly mortgage payment — $2,958 — according to 2022 data from the U.S. Census Bureau's American Community Survey.
How many people pay off their mortgage? ›
40% of Americans Pay Off Their House — Are They Doing Better Financially? For most Americans, a home mortgage is the biggest financial obligation they will ever have. A traditional mortgage spans 30 years and is often in the hundreds of thousands of dollars, so the interest charges can be enormous.
What is the debt in 2024? ›
Debt held by the public is projected to grow to $25,910 billion (98.4 percent of GDP) at the end of 2023 and $27,783 billion (102.0 percent of GDP) at the end of 2024.
How much house can I afford if I make $70,000 a year? ›
One rule of thumb is that the cost of your home should not exceed three times your income. On a salary of $70k, that would be $210,000. This is only one way to estimate your budget, however, and it assumes that you don't have a lot of other debts.
How much house can I afford 28/36 calculator? ›
28/36 rule example
| What you want to know | Calculation step | The math |
|---|
| If my “front-end” DTI ratio is 28%, what monthly payment can I afford? | Multiply your monthly income by 28% | 6,250 x 0.28 = $1,750 |
| If my “back-end” DTI ratio is 36%, what monthly payment can I afford? | Multiply your monthly income by 36% | 6,250 x 0.36 = $2,250 |
For that reason, he says to be conservative. “Being conservative means you save up for a 20 percent down payment, being conservative means you take a straightforward 15 or 30-year loan, and it means that you calculate these basic numbers and know that you're under the 28/36 rule very comfortably,” Sethi says.
How much money do you have to make to afford a $300 000 house? ›
How much do I need to make to buy a $300K house? You'll likely need to make about $75,000 a year to buy a $300K house. This is an estimate, but, as a rule of thumb, with a 3 percent down payment on a conventional 30-year mortgage at 7 percent, your monthly mortgage payment will be around $2,250.
