One in four homeowners remain cost-burdened, report finds
The average monthly mortgage payment in the United States declined slightly in 2025, but affordability pressures remain elevated, with nearly one in four borrowers still spending a significant portion of their income on housing, according to a new report by LendingTree.
The report found that the average new mortgage payment fell 2.4% year over year to $1,942 in 2025, down from $1,990 in 2024. Despite this modest relief, borrowers continue to face financial strain, as 24.3% of new homeowners are allocating at least 30% of their monthly income to mortgage payments — a widely used benchmark for housing cost burden.
Housing costs remain one of the largest components of household budgets, often crowding out spending on essentials such as food, transportation, and utilities. The data suggests that even with easing payments, broader affordability challenges persist due to high home prices and interest rates.
The findings also highlight disparities across demographics and regions. Younger buyers are facing the greatest pressure, with Generation Z borrowers spending an average of 24.5% of their income on mortgage payments — higher than millennials (20.3%) and Generation X (18.2%). Additionally, nearly one-third (32%) of Gen Z borrowers are exceeding the 30% affordability threshold.
Geographically, housing affordability varies significantly. California metros dominate the list of highest mortgage payments, with San Jose, San Francisco, and Los Angeles among the most expensive. Meanwhile, some Midwestern and Southern cities recorded the largest increases in payments, signaling that affordability challenges are spreading beyond traditionally high-cost regions.
The report also found that 10.2% of borrowers are now spending 40% or more of their income on mortgage payments, a level often considered “severely cost-burdened.”
|
Metric |
2024 |
2025 |
Change / Insight |
|---|---|---|---|
|
Average monthly mortgage payment |
$1,990 |
$1,942 |
▼ 2.4% decrease |
|
Average monthly income |
— |
$9,590 |
Basis for affordability calculation |
|
Avg. % of income spent on mortgage |
— |
20.3% |
Below 30% benchmark, but still high |
|
% spending ≥30% of income |
— |
24.3% |
~1 in 4 borrowers cost-burdened |
|
% spending ≥40% of income |
— |
10.2% |
Severely cost-burdened |
|
Gen Z avg. % of income spent |
— |
24.5% |
Highest among generations |
|
Gen Z spending ≥30% |
— |
32.0% |
Largest affordability strain |
Overall, the report indicates that while mortgage payments have eased slightly, structural affordability issues remain entrenched. Rising home prices, elevated interest rates, and income constraints continue to limit purchasing power, particularly for younger buyers and those in high-cost urban areas.
As a result, affordability remains a central concern in the housing market, with many prospective buyers needing to make trade-offs — such as smaller homes or longer commutes — to manage costs.
