But your interest rate only decreases at 5%, 10%, or 20% down. One of the biggest benefits to making a higher down payment is the interest rate reduction it buys you. Three percent is the minimum down payment for FHA loans, although some loan types have higher or lower minimums. Also, for many people, six percent isn’t necessarily the optimal amount to put down on a first home. This percentage varies up or down depending on each home buyer’s situation. Given that the median home price in Texas is $301,763*, that places the average down payment on a house in Texas at $18,105 for first-time home buyers. What is the average down payment on a house in Texas?Īccording to the National Association of Realtors, the average down payment on a house for first-time homebuyers nationwide is 6%. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation. In the current low-rate environment, getting a fixed-rate mortgages will guarantee that you maintain relatively low interest costs throughout the lifetime of your mortgage.Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. This implies that more than half of existing mortgages were originated in 2010 or later, a period of historically low interest rates. Nearly 90% of all outstanding mortgages are fixed-rate, and over 60% carry interest rates between 3.0% and 4.9%. Mortgages can come with either fixed or variable rates. On the other hand, a 30-year mortgage in the same $150,000 sum, but with a 5% interest rate, will result in average monthly payments of $805.23. In 2015, the average American homeowner carried $120,000 in remaining mortgage debt, also known as "principal."įor example, to finance the purchase of a $215,500 home, the median in 2015, a consumer drawing a 30-year mortgage of $150,000 with a 4% interest rate would make average monthly payments of $716.12, each month increasing the amount of principal they pay, and decreasing the total balance and the interest. The principal cost of a mortgage refers to the initial amount borrowed by a consumer for their home purchase. As time goes by, the portion of money going towards interest decreases while the amount put towards reducing principal increases-a process called amortization. The bulk of each payment is split between paying interest and paying principal. In 2015, the average American homeowner spent about $1,800 on paying down the principal on their loans and nearly $8,000 on mortgage interest and related charges, a combined monthly average of about $820. Breakdown of the Average Mortgage Payment Mortgage holders over 64 are likely retired and have either paid down their mortgage or are spending on a less expensive home, leading to a lower median payment for this group. Consumers under 25 are likely able to afford a less expensive home than older professionals, and make a median monthly mortgage payment of under $800. Median payments increased for each successive working-age group, reaching their peak among people between 35 and 44 and declining for age groups with more retirees.īorrowers of working age, in the 25 to 64 year old range, made monthly mortgage payments of close to $1,000. Until the 45 to 54 age group, borrower age had a positive correlation with the median size of mortgage payments in 2015. Average Monthly Mortgage Payments by Age Group On the other hand, interest rates are higher for those who make less money, likely because interest rates are typically higher on smaller loans. For the wealthiest Americans making over $120,000 a year, the median monthly mortgage payment was $1,600 in 2015, compared to $607 for those making $10,000 to $19,999. Monthly mortgage payments increase with income, as wealthier consumers are likely to take out larger loans to buy more expensive homes. People earning more than $40,000 had a median interest rate of 4%, a significantly lower rate for mortgages. This stood in contrast to the fact that median interest rates were highest among borrowers earning $10,000 to $40,000. Average Mortgage Payment Amounts by Incomeīreaking down mortgage payment information by incomes showed that median payments were larger for census respondents in higher income brackets. In the South, where median annual income was the lowest, mortgages had the highest interest rates, leading to payments slightly higher than in the Midwest. In the wealthiest regions of the country, the Northeast and West, consumers had larger outstanding balances on their mortgages and made higher monthly payments. While mortgage interest rates were similar for all regions, this did not correlate with similarities in payment amounts.
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