How Does Your Mortgage Debt Compare to Your Fellow Americans'?

If you're buying a house, chances are good you're going to commit to a mortgage. But, just how much are people actually borrowing to buy homes?

Here's what you need to know about how much the typical American owes on their home loan.

Here's the average mortgage payment among homeowners

According to data from the Federal Reserve, around 42% of families in the U.S. had a loan that was secured by their primary home. The median amount of this debt was $155,600 in 2022.

Now, some people likely have much more mortgage debt than the average. And some people have lower balances than most of their fellow Americans either because they purchased inexpensive homes and didn't borrow much to begin with or because they have owned their house for a long time and have been working on decreasing their mortgage balance for years, bringing down their total debt.

Still, this means most homeowners owe a substantial amount of money on their properties. And, since the debt is used as collateral guaranteeing their loans, they have to keep making those payments to their mortgage lenders steadily every single month in order to be able to remain in their homes and avoid foreclosure.

How much mortgage debt should you have?

It's interesting to compare your home loan's value to the average mortgage debt owed across the country. But while it's kind of fun to see what other people are doing in terms of paying down their home loans, the only thing that really matters when it comes to your own mortgage is whether it's affordable for you.

To determine that, you'll typically want to look at your payment as a percentage of your income. Most experts recommend keeping your total housing costs to around 30% of your income or less. Anything above this and you're considered cost-burdened. This includes your mortgage, but also other expenses like property taxes and homeowners insurance as well.

If you're spending more than 30% of what you make on your home loan, you may find yourself "house poor" and unable to do things you need with your money. With so much of your income going towards your mortgage lender, there may not be enough left over to save for retirement or for other financial goals. Or you may find yourself forced to reach for your credit cards to cover necessities if your paycheck is being taken up by your home loan.

If you are house poor, increasing your income or decreasing your housing costs can provide some relief. Look into a side hustle or job training to increase what you earn, or consider getting a roommate to help you shoulder the burden of your mortgage bills. Moving could be an option too, but it may not be the best one due to high transaction costs and because mortgage rates are higher than in recent years, so getting a new home loan could be even more expensive.

If you haven't yet bought a home, you'll want to try to avoid finding yourself in a situation where your mortgage is too expensive. So, be sure to keep your costs below this 30% recommendation and see how your housing payment will fit into your budget before you commit.

If your home loan will be too expensive for you -- regardless of how it compares to what your fellow Americans owe -- don't buy and set yourself up for a world of financial trouble. Instead, wait until you've saved more or found a lower-priced home you love that won't derail your finances for years to come.